THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

RIVERSIDE 


GIFT  OF 

Dr.  Gordon  Watkins 


^UJsiun^O 


CONSUMERS' 

CO-OPERATIVE 

SOCIETIES 


» 


TRANSLATED  FROM  THE  FRENCH    BY  THE  STAFF  OF 
THE  CO-OPERATIVE    REFERENCE   LIBRARY,   DUBLIN. 

WITH  AN  INTRODOCTION  AND    SUPPLEMENT- 
ARY CHAPTER  BY  JAMES   PETER  WARBASSE. 

EDITED  IN  THE  UNITED  STATES  BY  CEDRIC  LONG 


CONSUMERS' 
CO-OPERATIVE  SOCIETIES 


Br  CHARLES  GIDE 

Proftuor  of  Political  Economy  in  the  Facultv  of  LatoM,  Univer$itv  of  Pari$ 


NEW  YORK 

ALFRED  •  A  • KNOPF 

MCMXXII 


COPYRIGHT,  1922,  BY      ^5  /-  6^ 
ALFRED  A.  KNOPF,  Ino. 

Published,  October,  19a 


Bet  up  and  printed  by  the  Vail-Ballott  Co.,  Binohamton,  y.  Y. 

Paper  furrtiihed  bu  W.  F.  Etherinoton  i  Co.,  Neu)  York,  N.  Y. 

Bo%nd  by  the  H.  Wolff  Eitate.  Neic  York,  N.  Y. 


JtAUVVAQTVKBD     IH     T^B     VNITEO     STATES     OF     AMERICA 


EDITOR'S  PREFACE 

The  excellent  translation  of  Professor  Gide's  "Les 
Societes  Cooperatives  de  consommation"  which  follows  is 
the  result  of  the  labors  of  the  staff  of  the  Co-operative 
Reference  Library,  Dublin,  Ireland.  The  present  editor, 
in  preparing  the  book  for  an  American  public,  has,  by 
permission  of  the  fellow-co-operators  in  Dublin,  eliminated 
such  of  the  English  footnotes  as  were  of  interest  principally 
to  British  readers  or  has  incorporated  them  in  his  own.  He 
has  also  moved  up  into  the  text  many  of  Professor  Gide's 
notes  added  by  him  at  the  time  of  the  translation  into 
English.  Therefore  at  present  there  are  only  the  two  kinds 
of  footnotes :  those  of  the  original  author  and  those  of  the 
American  editor. 

Without  the  painstaking  work  of  the  translators  and 
those  who  assisted  them,  this  American  edition  would 
probably  not  have  been  undertaken  at  this  time.  Without 
Professor  Gide's  help  in  reading  through  the  proofs  and 
making  several  valuable  suggestions,  the  book  would  not 
have  the  contemporary  value  it  now  possesses.  Finally, 
Dr.  Warbasse,  in  contributing  a  preface  and  a  chapter  on 
"Co-operation  in  the  United  States,"  has  made  this  book, 
always  indispensible  to  the  student  of  European  Co-opera- 
tion, an  essential  to  those  who  are  studying  the  Co-opera- 
tive Movement  in  the  United  States.  The  present  editor 
is  honoured  in  being  able  to  append  a  few  additional  Amer- 
ican notes  and  to  prepare  this  edition  for  the  publisher. 

Cedric  Long 


Digitized  by  the  Internet  Arciiive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/consumerscooperaOOgideiala 


CONTENTS 

Introduction  ix 

I.     Co-operation     in     the     United     States, 

BY  James  P.  Warbasse  1 

II.     The  Object  of  a  Consumers'  Co-operative 

Society  17 

III.  The  Co-operative  Program  :   Criticism  by 

Economists  22 

IV.  The  History  of  Distributive  Co-operation     31 

V.     Statistics  and  Geographical  Distribution 

OF  THE  Co-operative  Movement  48 

VI.  Various  Systems  of  Sale  63 

VII.  The  Division  of  Profits  78 

VTII.  Members  100 

IX.  Capital  107 

X.  Various  Types  of  Consumers'  Societies  119 

XI.  Co-operative  Federations  153 

XII.     The   Conflict  between   Co-operative  So- 
cieties AND  Traders  174 

XIII.  Causes    of    Success    or    Failure    of    Con- 

sumers' Societies  190 

XIV.  The  Relations  between  Co-operative  So- 

cieties AND  the  State  207 

XV.     Production  by  Consumers'  Societies  219 

XVI.     The  Employes  and  Workmen  in  Co-opera- 
tive Societies  245 

XVII.     Co-operation  and  Socialism  261 

Index  289 

vU 


INTRODUCTION 

Two  antagonistic  economic  forces  today  are  striving  for 
supremacy.  The  conflict  between  them  causes  the  general 
social  disorganization  now  obvious.  A  stabilized  society 
will  come  to  pass  only  when  one  or  the  other  of  these  becomes 
dominant.  The  great  war  was  but  a  minor  and  subsidiary 
flare-up  in  one  of  the  contending  camps.  Shall  the  life  and 
industries  of  the  world  be  conducted  for  purposes  of  profit  or 
for  purposes  of  service? — this  is  the  Great  Conflict.  The 
war  was  a  melange  of  hidden  motives,  uncertainties,  hypoc- 
risies and  subterfuges;  the  Great  Conflict  is  clear-cut  and 
definite.  On  the  one  side  are  the  most  powerful  forces  in 
society  from  the  material  standpoint.  They  get  their 
strength  from  the  belief,  of  the  many,  in  the  competitive 
profit-system.  They  are  supported  by  the  vast  interests 
which  subsist  upon  income  from  property.  They  are  main- 
tained by  the  human  hunger  for  privilege  and  power  and  the 
natural  desire  to  have  the  good  things  of  life  without  per- 
forming service.  They  are  associated  with  the  ownership 
of  the  major  part  of  the  property  of  the  world.  They  con- 
trol the  great  governments,  with  their  coercive  might  of 
arms,  police,  and  jurisdiction  over  the  lives  of  the  people. 

On  the  other  side  are  forces  which  are  as  yet  weak  and 
but  meagrely  organized  but  which  are  steadily  growing. 
They  are  impelled  by  the  determined  conviction  in  the 
minds  of  people  that  it  is  possible  to  organize  the  economic 
affairs  of  the  world  upon  the  basis  of  production  and  dis- 
tribution for  service.  A  hunger  is  growing  among  the  toil- 
ing masses  for  the  control  of  the  aff'airs  of  their  lives  to  this 
end.     Substantiating  these  tendencies  are  the  facts  that  the 


X        CONSUMERS'  CO-OPERATIVE  SOCIETIES 

workers  are  organizing  more  and  more  effectively  as  pro- 
ducers in  the  field  of  production  and  as  consumers  in  the 
field  of  consumption.  The  demonstrations  of  these  possi- 
bilities are  capturing  the  imagination  of  the  people  and 
creating  the  vision  of  larger  things.  On  the  first  side,  and 
contributing  to  the  strength  of  the  second  side,  is  the  present 
breaking  down  of  the  profit-system.  There  are  some  who 
look  forward  with  fear  to  a  collapse  of  the  economic  struc- 
ture of  modern  society  and  to  a  coming  revolution.  Fears 
of  such  a  future  event  are  groundless — such  a  catastrophe 
need  not  be  anticipated  as  a  possibility  of  the  future — it 
is  already  coming  to  pass.  Whether  we  realize  it  or  not,  we 
are  living  in  the  midst  of  a  cataclysm.  The  old  order  is 
breaking  to  pieces.  The  life  of  an  individual  is  a  momen- 
tary flash  in  the  history  of  society ;  the  events  through  which 
we  are  living  are  burning  and  quick. 

As  the  profit-motive  in  industry  fails  to  serve  the  people 
as  a  social  instrument,  two  organizations  of  society  stand 
ready  to  assume  its  functions.  One  is  the  political  State; 
the  other  is  the  voluntary,  non-political  organization  of  the 
people  in  the  Co-operative  Movement.  "VSTien  the  present 
disorder  has  subsided,  the  future  conflict  will  be  between  these 
two  principles.  One  is  the  compulsory  political  idea ;  the 
other  is  the  idea  of  free  and  voluntary  association.  Each 
is  making  progress.  Each  moves  in  the  direction  of  pro- 
duction and  distribution  for  service.  Harmonization  of 
these  two  elements  is  possible  and  to  be  hoped  for  as  an  event 
of  the  future. 

In  the  reorganization  of  society  now  imminent  there  is 
a  question  of  paramovmt  importance  to  be  answered :  Can 
the  people  conduct  their  own  business  eff^ectively  or  must 
they  eternally  look  to  private  profit-making  interests  or  to 
the  impersonal  State  to  do  it  for  them?  This  question  is 
answered  by  the  co-operative  societies  in  which  the  people 
are  giving  the  world  a  demonstration  of  their  capacity  to 


INTRODUCTION  xi 

do  things  for  themselves.  They  begin  with  the  distribution 
of  the  necessities  of  life,  such  as  food,  clothing  and  shelter, 
and  thus  gain  better  access  to  the  things  they  need.  But 
what  is  more  important,  they  learn  by  experience  the  tech- 
nique of  carrying  on  distributive  business  in  the  interest  of 
the  consumers.  Next  comes  federation  of  distributive  so- 
cieties, and  then  wholesaling.  This  gives  experience  in  the 
management  of  big  business.  Then  follows  production  for 
use — production  in  their  own  factories  and  Avorkshops  for 
their  own  non-speculative  use.  When  the  consumers  have 
reached  back  to  the  ownership  of  the  productive  plants,  the 
land  and  the  raw  material,  the  demonstration  is  complete 
that  the  people  can  conduct  their  own  business  from  start  to 
finish  for  service  and  not  for  private  profit.  When  this 
end  is  reached,  the  victory  is  won;  a  revolution  has  slowly 
but  definitely  taken  place. 

There  is  another  question :  How  can  the  people  obtain 
control  of  industry  and  administer  it  effectively  in  their 
own  interest?  Voting  does  not  provide  the  trai^iing.  There 
is  a  prevalent  fiction  that  all  that  is  needed  is  for  the  ma- 
jority of  people  to  vote  at  an  election  to  instruct  the  gov- 
ernment to  take  over  profit-making  industries  and  use  them 
for  the  service  of  the  people.  But  these  industries  have 
never  been  used  for  that  purpose,  nor  have  the  people  who 
are  administering  them  and  working  in  them  had  experience 
in  service  for  social  purposes.  The  industries  and  the 
people  have  been  adjusted  to  the  profit  motive.  The  change 
is  too  difficult  to  be  accomplished  by  an  edict.  Russia  has 
discovered  this. 

There  is  a  serious  obstacle  to  the  success  of  the  sudden  in- 
dustrial revolutionary  method  in  a  certain  fact  that  has 
received  little  attention  from  leaders  of  labour  and  less  from 
economists.  It  is  the  fact  that  the  organization  of  society 
solely  upon  a  producers'  basis  cannot  solve  the  economic 
problem.     The  theory  that  the  workers  should  capture  the 


xii       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

industries  by  a  revolution  and  that  around  the  industrial 
function  should  revolve  all  of  the  reforms  of  the  social  life, 
has  been  responsible  for  many  of  the  vagaries  that  have  led 
the  people  astray.  The  "Christian  socialist"  movement, 
"syndicalism"  and  "guild  socialism"  have  all  been  based  upon 
the  hypothesis  that  labour  is  the  great  function  and  that  it  is 
at  the  point  of  production  that  mankind  needs  to  begin  or- 
ganization and  control.  For  this  reason  we  find  these  or- 
ganizations striving  to  get  for  the  workers  the  best  rewards 
possible.  This  is  good  as  far  as  it  goes,  but  it  never  has  and 
it  never  can  solve  the  workers'  problem.  It  has  not  the  power 
to  change  the  motive  of  industry.  This  method  has  striven  to 
give  the  worker  "the  full  value  of  the  wealth  he  produced." 
"Full  reward  for  labour"  has  been  the  aim.  That  motive  has 
meant  working  for  wages — producing  for  wages — and  pro- 
ducing vnih  that  motive  has  meant  not  production  for  use 
but  production  for  profit.  Labour,  like  the  capitalist,  has 
sought  to  get  as  much  for  itself  as  possible,  and  that  means 
as  much  from  the  consumers — from  all  the  people — as  pos- 
sible. This  psychology  is  not  compatible  with  production 
for  use.  In  the  trade  union,  as  well  as  in  the  merchants' 
and  manufacturers'  association,  the  chief  problem  is  how  to 
get  more  from  the  consumer.  And  no  group  wiU  solve  the 
economic  problem  with  this  motive. 

Other  exclusively  producing  enterprises  such  as  the  "self- 
governing  workshop,"  "producers'  co-operative,"  and  "co- 
operative communistic  colonies,"  working  for  wages,  pro- 
clucing  for  profit,  laying  emphasis  on  labour  as  the  exalted 
function,  all  suffer  one  and  the  same  fate :  they  either  fail  or 
they  become  capitalistic — sooner  or  later.  Let  workers,  in 
any  form  of  organization,  centralized  at  the  point  of  pro- 
duction, succeed  from  the  financial  standpoint,  and  their  or- 
ganization becomes  capitalistic  and  profit-making.  Idealism 
in  that  field  is  compatible  with  poverty ;  but  not  with  busi- 
ness success.     Success  means  failure.     The  industrial  coun- 


INTRODUCTION  xiii 

tries  are  written  over  with  a  hundred  years  of  historic  cor- 
roboration of  this  fact.  The  few  successful  producers'  co- 
operative enterprises  in  Great  Britain,  the  larger  numbers  in 
Germany,  and  the  still  more  in  Italy  and  France  do  not  con- 
tradict the  general  truth  of  this  statement.  Only  this  modi- 
fication need  be  made:  tliose  that  are  not  on  the  way  to  fail 
or  to  become  capitalistic  are  on  the  way  to  be  taken  over  by 
the  consumers'  co-operative  societies. 

That  work  is  the  great  function  is  an  idea  that  has  been 
promoted  by  slave  OAvners,  manufacturers,  capitalists, 
schoolmasters,  and  parents  who  had  no  alternative.  It  is 
not  natural  to  work.  Society  has  been  confused  by  artificial 
standards.  People  Avork  only  as  a  secondary  reason.  They 
work  in  order  that  they  may  consume.  It  is  not  for  the  win- 
ning of  wages ;  it  is  for  the  things  that  wages  will  buy  that 
men  work.  But  so  much  emphasis  has  been  laid  upon  labour 
and  wages  that  money  has  come  to  be  the  object  both  of 
worker  and  capitalist.  The  fact  is,  that,  not  in  work  but 
in  consuming  things  is  to  be  found  the  great  joys.  Food, 
clothing,  housing,  music,  art,  literature,  entertainment,  love, 
the  pleasure  of  companionship — these  are  the  things  that 
come  into  the  body  through  its  senses  and  give  it  joy.  It  is 
not  standing  at  a  whirling  machine  that  gives  the  satisfac- 
tions in  life ;  but  in  consuming  the  things  that  can  be  gotten 
with  the  wages  obtained,  perhaps,  in  work  at  the  machine. 

The  one  person  who  merits  supreme  consideration  is  the 
consumer;  he  is  everybody.  The  alternative  to  political 
revolution  and  to  profit-making  industrial  control  is  produc- 
tion controlled  by  the  organized  consumers  and  conducted  in 
their  interest.  This  means  production  for  use ;  and  it  is  the 
only  form  of  production  that  has  that  motive. 

If  the  world  is  to  be  saved  by  substituting  for  the  profit 
system  the  system  of  doing  things  for  purposes  of  service 
then  it  must  be  saved  through  the  organized  Consumers' 
Movenjept,     TThe  consumers   are  no  class.     They   are  all. 


xiv     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

They  are  the  people  standing  together,  not  in  drudgery,  not 
by  the  whirring  wheel,  but  in  the  enjoyment  of  things — unit- 
ing to  help  one  another  secure  better  access  to  the  things  that 
make  life — helping  one  another  to  life  in  greater  abundance. 

When  the  Co-operative  method  becomes  prevalent,  then 
should  the  worker  get  the  value  of  what  he  produces ;  then 
should  the  access  to  the  good  things  of  life  be  secured  by  the 
performance  of  useful  service.  Through  the  Co-operative 
Movement  the  prevalent  economic  competitive  system  may  be 
supplanted — not  by  chaos,  suifering  and  revolution,  but  by 
an  ordered,  evolutionary  method  which  employs  the  humane 
qualities  of  friendship  and  mutual  aid,  instead  of  rivalry  and 
antagonism. 

My  friend.  Professor  Charles  Gide,  is  the  foremost  spokes- 
man of  this  Movement  in  France.  His  teaching  has  clari- 
fied its  philosophy  and  illumined  its  social  significance.  It  is 
an  augury  of  moment  that  an  economist  of  his  profound 
scholarship  should  be  drawn  to  Co-operation  as  the  agency 
above  all  others  which  he  believes  has  the  power  to  reorganize 
society.  This  book  represents  a  study  in  the  field  of  fun- 
damental social  reorganization,  which  should  prove  of  great 
help  in  promoting  an  enlightened  interest  and  understanding. 
It  is,  indeed,  a  pleasure  to  contribute  the  preface  and  a 
privilege  to  pay  homage  to  its  distinguished  author. 

J.  P.  W. 


CONSUMERS' 

CO-OPERATIVE 

SOCIETIES 


CHAPTER     I 

CO-OPERATION     IN      THE     UNITED      STATES 

BY     JAMES      PETER     AVARBASSE 

The  spirit  of  co-operation  is  discovered  early  in  the 
history  of  the  United  States.  Although  pioneers  in  a  new 
country  are  prone  to  develop  individualism  and  seek  their 
fortunes  alone,  sooner  or  later  they  learn  that  positive 
advantages  are  to  be  had  by  union  of  their  forces.  Mutual 
aid  is  called  upon  to  protect  them  from  the  elements  and  from 
unfriendly  people.  As  much  as  the  individual  may  enjoy 
pushing  out  alone  into  the  wilderness,  he  experiences  a 
greater  sense  of  security  when  he  unites  with  his  fellow-men 
for  their  mutual  benefit.  The  union  of  people  in  the  polit- 
ical state  is  an  expression  of  this  sense.  In  the  economic 
field,  expressions  of  co-operation  are  found  in  the  co- 
operative and  communistic  colonies  which  settled  on  the  land 
in  the  latter  part  of  the  Eighteenth  Century  and  the  early 
part  of  the  Nineteenth.  The  oldest  of  these  is  the  Society 
of  Shakers  which  was  established  at  New  Lebanon,  New 
York  State,  in  1787. 

From  that  time  down  to  the  present  there  have  always 
been  colonies  in  which  the  members  attempted  to  carry  on 
their  industrial  and  social  life  in  the  spirit  of  co-operation. 
They  have  been  occupied  in  farming  and  other  forms  of 
productive  work,  owning  property,  selling  their  produce, 
and  buying  in  common.  They  have  come  and  gone. 
Some  have  succeeded  commercially  as  businesses,  but  none 

have  succeeded  as  social  enterprises  because  their  principles 

I 


2         CONSUMERS'  CO-OPERATIVE  SOCIETIES 

were  of  the  profit-making  type  rather  than  the  social. 
The  certain  fate  of  these  organizations  is  either  to  fail,  or, 
if  they  succeed  from  the  financial  standpoint,  to  become 
capitalistic,  profit-making  enterprises.  So  long  as  they  are 
struggling  for  success  their  idealism  remains ;  but  as  soon 
as  they  win  what  they  are  seeking,  their  idealism  perishes. 
Their  success  is  their  destruction.  This  is  not  only  the 
case  with  so-called  "co-operative  colonies"  but  all  collective 
enterprises  of  producers  whose  purpose  is  to  make  profits 
by  selling  to  the  consuming  public. 

Then  came  the  Rochdale  Era,  following  the  definite  formu- 
lation of  a  co-operative  philosophy  and  the  working  out 
of  a  specific  plan  for  putting  it  in  operation.  This  was 
the  beginning  of  the  Consumers'  Co-operative  Movement. 
Its  first  appearance  in  the  United  States  was  in  1845  when 
the  Workingmen's  Protective  Union  opened  its  first  store 
in  Boston.  Since  that  time  the  working  people  have  made 
continuous  attempts  to  establish  co-operative  societies.  In 
1853  the  International  Industrial  Assembly  of  America,  with 
a  membership  of  200,000,  promoted  co-operative  enterprises. 
The  National  Labor  Union  did  the  same  in  1866.  These 
were  followed  by  the  Patrons  of  Husbandry,  the  Granges, 
the  Sovereigns  of  Industry,  and  the  Knights  of  Labor.  By 
1877  these  latter  organizations  had  several  hundred  stores 
throughout  the  eastern  states.  They  developed  also  many 
productive  industries  which  they  called  co-operative.  The 
New  England  Protective  Union  at  one  time  had  400  dis- 
tributive stores  extending  throughout  the  Atlantic  States. 

The  enterprises  established  by  these  old  organizations 
were  all  deficient  from  the  co-operative  standpoint.  Most 
were  lacking  in  the  fundamental  qualities  of  Co-operation. 
The  others  that  could  be  regarded  as  co-operative  were  so 
deficient  in  co-operative  education  that  their  members  rarely 
understood  the  nature  and  possibilities  of  their  enterprise. 
The  great  majority  failed. 


CO-OPERATION  IN  THE  UNITED  STATES         3 

Another  form  of  early  co-operation  in  the  United  States 
was  that  of  the  building  associations,  or  "building  and  loan 
associations,"  which  extends  over  a  long  period.  The  first 
organization  of  this  sort  was  the  Oxford  Provident  Building 
Association  founded  near  Philadelphia  in  1831.  From  that 
time  to  the  present  there  has  been  an  extensive  development 
of  these  organizations  in  the  United  States.  They  have 
provided  for  savings,  and  for  loans  for  the  building  of 
homes.  These,  like  many  similar  organizations,  remained 
always  on  the  border  line  but  never  became  fully  co- 
operative. 

Co-operative  banking  and  credit  associations  date  back 
also  to  the  early  part  of  the  last  century.  These  early 
struggling  societies  were  practically  all  destroyed  by  the 
Civil  War.  Then  there  crept  in  from  Canada,  by  way  of 
Massachusetts,  banking  inspiration  brought  by  Alphonse 
Desjardins.  Later  several  states  enacted  co-operative 
banking  laws,  and  the  movement  slowly  began  to  spread. 

Co-operative  distributive  societies  also  have  continued  to 
develop  with  slow  but  steadv  improvement  since  that  first 
store  in  Boston  over  seventy-five  years  ago.  There  was 
a  period  in  the  early  part  of  the  present  century  when  the 
Socialists  became  interested  in  Co-operation  and  were  re- 
sponsible for  organizing  many  societies.  These  suffered 
from  an  excess  of  idealism  and  a  deficiency  of  practical 
executive  talent.  They  disappeared.  While  Co-operation 
was  making  its  remarkable  progress  in  Europe,  it  progressed 
very  slowly  in  this  country.  Greater  difficulty  in  creating 
interest  has  always  existed  in  the  United  States  and  the 
proportion  of  failures  has  been  larger  than  in  Europe. 

The  reasons  for  this  slow  progress  are  natural  and  ob- 
vious. The  chief  reason  resides  in  the  fact  that  until  1916 
there  was  no  central  source  of  information  and  guidance 
such  as  existed  in  each  European  country ;  the  people  started 
societies  that  were  not  co-operative;  and  they  attempted  to 


4         CONSUMERS'  CO-OPERATIVE  SOCIETIES 

run  them  without  standardized  information  or  guidance. 
Besides  this  there  were  the  economic  reasons.  A  new 
country  with  limitless  opportunities  breeds  the  spirit  of 
individualism.  Profit-making  business  and  the  eager  quest 
for  the  dollar  dominated  the  public  mind.  Each  individual 
hoped  to  win  and  to  go  ahead  of  his  neighbour  in  the  com- 
petitive struggle.  In  no  country  has  the  urge  of  individual 
profit-making  become  so  strong  and  the  opportunity  so 
great  as  in  the  United  States.  This  condition  engendered 
a  state  of  mind  in  which  Co-operation  did  not  thrive. 

The  newness  of  the  country  gave  rise  to  fluctuations  of 
population.  The  people  have  been  restless.  They  have  not 
remained  to  live  in  the  neighbourhood  where  they  were  born. 
New  neiglibours  are  not  good  co-operators.  The  presence 
of  frontiers  to  the  westward,  toward  which  a  fluid  population 
could  always  keep  moving,  has  been  an  obstacle  to  the 
stability  necessary  for  co-operative  organization. 

The  examples  of  great  wealth  and  the  possibilities  of 
"getting  on"  have  always  encouraged  hope  even  among  the 
poorest.  The  idea  that  any  man  can  grow  rich  by  his 
own  individual  actions  has  deterred  people  from  uniting 
in  a  project  which  is  based  upon  an  acknowledgment  of  the 
need  of  mutual  aid,  and  in  which  the  early  rewards  are  so 
meagre  while  the  efforts  are  so  great. 

The  mixture  of  many  races  and  nationalities,  with  the 
differences  of  customs  and  languages,  has  militated  also 
against  the  union  of  people  in  co-operative  societies. 

The  strenuous  competition  among  private  tradesmen  and 
the  allurements  of  advertising  have  won  the  people  to  a 
habit  of  shopping  and  bargain  hunting  until  these  have 
become  a  prevalent  form  of  American  diversion  and  recrea- 
tion. While  competition  has  kept  prices  down  and  has  made 
it  possible  to  find  reasonable  prices,  it  has  prompted  the 
tradesmen  to  offer  every  conceivable  inducement  and  entice- 
ment for  the  sake  of  trade. 


CO-OPERATION  IN  THE  UNITED  STATES         5 

Then  too  this  is  the  land  of  the  great  god  "Business." 
The  laws  as  well  as  the  public  psychology  are  all  adjusted 
to  the  profit-making  system.  The  influential  elements  in 
each  community  are  the  "boards  of  trade,"  "merchants 
associations"  and  "chambers  of  commerce."  These 
organizations  are  composed  of  the  prominent  citizens. 
They  dominate  the  schools,  the  press,  and  the  public  thought, 
as  well  as  the  industries.  They  are  organized  and  operate 
for  the  purpose  of  making  profits  from  the  unorganized 
consumers.  And  these  bodies,  found  in  every  community, 
are  naturally  opposed  to  the  Co-operative  Movement. 
Every  device  conceivable  that  can  be  used  by  a  powerful 
organization  to  destroy  a  weaker  one  is  resorted  to  by  these 
elements  to  suppress  co-operative  associations,  for  the  latter 
are  capable  of  demonstrating  that  the  people  can  carry  on 
business  for  themselves,  in  their  own  interest. 

A  most  serious  hindrance  to  co-operative  progress  has 
been  the  multitude  of  spurious  **yCO-operative"  societies. 
They  vary  from  the  wildest  and  most  fanciful  schemes  of 
well-meaning  persons  to  the  most  unscrupulous  fraud. 
These  enterprises  take  millions  of  dollars  from  working 
people,  who  are  left  hostile  to  true  Co-operation.  During 
the  past  three  years  these  undertakings  have  been  especially 
flagrant.  They  have  capitalized  the  growing  interest  in 
Co-operation  and  sold  the  people  a  poor  imitation.  Some 
of  the  promoters  of  these  ventures  have  been  sent  to  prison ; 
most  of  them  are  at  large,  organizing  and  reorganizing  their 
failing  schemes.  These  organizations  follow  the  chain- 
store  methods.  This  centralized  plan  of  administration 
invariably  fails.  It  succeeds  in  profit  business,  but  in  Co- 
operation it  fails  for  lack  of  democracy,  local  interest  and 
efficiency,  when  downright  fraud  is  not  the  cause  of  the 
failure.  The  practical  reason  why  even  the  well-intended 
among  these  things  have  failed  has  been  because  of  a  central 
bureaucracy  which  has  been  ignorant  of  both  co-operative 


6        CONSUMERS'  CO-OPERATIVE  SOCIETIES 

theory  and  practice.  During  the  period  from  1919  to 
1923  twelve  of  these  centralized  undertakings  have  failed 
from  the  Atlantic  to  the  Pacific.  They  have  had  presented 
to  them  every  evidence  that  their  schemes  could  not  succeed, 
and  still  they  went  on  collecting  money  from  working  people 
which  could  have  no  other  fate  than  to  be  lost.  A 
characteristic  of  these  organizations  has  been  that  they  all 
attacked  The  Co-operative  League,  the  national  educational 
organization  whose  function  is  to  give  advice  on  co-opera- 
tive problems.  Among  the  most  conspicuous  examples  have 
been  the  "National  Co-operative  Association,"  the  "Co- 
operative Society  of  America,"  and  the  "Pacific  Co-opera- 
tive League."  Over  $15,000,000  has  been  lost  in  three  years 
in  these  ventures  by  deluded  people  who  thought  that  they 
were  promoting  Co-operation.  But  still  greater  than  this 
is  the  loss  of  the  morale  which  the  movement  suffers.  This  is 
the  dark  side.  It  should  be  kept  in  mind  because  the  desire 
for  quick  results,  the  contempt  for  patient  education,  and  the 
esteem  in  which  the  profit  motive  is  held  in  the  United  States 
will  continue  to  operate  as  causes  of  disaster  unless  the 
people  are  forewarned. 

The  brighter  aspects  are  to  be  seen  in  every  field.  For 
fifty  years  there  has  poured  into  the  United  States  a  stream 
of  immigrants  from  countries  having  well  established  Co- 
operative Movements.  These  people  have  brought  with  them 
not  only  the  knowledge  of  what  their  native  societies  were 
doing  but  they  brought  a  co-operative  spirit.  There  have 
survived  from  the  early  period  many  societies  scattered  over 
the  country.  A  few  of  these  date  back  nearly  forty,  and 
some  nearly  fifty  years.  The  immigrant  people  have 
promoted  Co-operation  among  these  old  societies  until  to- 
day co-operative  stores  are  to  be  found  in  almost  every  part 
of  the  country.  Since  1916  expansion  has  taken  place  due 
partly  to  the  stabilization  and  enlargement  of  industry 
during  the  war,  partly  to  the  conspicuousness   of  profit- 


CO-OPERATION  IN  THE  UNITED  STATES  7 

eering  and  the  very  obvious  evils  of  the  profit-making 
economic  system,  and  partly  to  the  work  of  The  Co-opera- 
tive League  in  promoting  the  knowledge  of  the  fundamentals 
of  Co-operation. 

The  Movement  has  developed  all  over  the  country.  The 
fanners  have  done  the  most  of  any  one  class  for  Co-operation 
in  the  United  States.  This  is  partly  due  to  the  fact  that 
until  1921  the  farmers  were  the  largest  class.  Unlike  Great 
Britain,  Germany,  and  the  other  industrial  countries  with  a 
large  co-operative  development,  it  has  not  been  the 
industrial  workers  but  the  farmers  who  have  taken  the  lead. 
Much  help  has  come  from  the  agricultural  population  who 
emigrated  from  Denmark,  Germany,  Norway,  Sweden  and 
Finland.  But  old  American  stock  has  also  played  a  part  in 
this  development.  The  United  States  is  no  longer  an  agri- 
cultural country  but  an  industrial  country,  now  that  more 
than  half  of  its  population  lives  in  the  cities.  The  strength 
of  the  Co-operative  Movement  was  formerly  in  the  rural 
districts  and  largely  among  the  native  born ;  but  in  the  last 
few  3'ears  the  strongest  and  largest  societies  have  developed 
in  the  industrial  centres.  This  industrial  or  town  move- 
ment is  predominately  foreign  bom  in  its  leadership. 

IVIany  farmers'  national  organizations  have  promoted 
Co-operation.  Most  important  service  has  been  rendered 
by  The  Farmers'  Educational  and  Co-operative  Union. 
This  organization  started  in  Texas  in  1902,  and  has  now 
extended  into  thirty  states.  Its  primary  business  is  teach- 
ing the  fanners  how  to  organize  as  producers  to  get  the 
best  price  for  their  product.  This  is  a  trade  union  or 
business  function.  But  it  performs  also  the  service  of 
teaching  these  same  farmers  how  to  conduct  distributive 
stores.  There  comes  about  a  very  natural  sequence.  The 
farmers  learn  how  to  work  together  in  their  selling  organ- 
ization ;  they  then  use  it  to  purchase  for  themselves  agri- 
cultural supplies ;  having  taken  this  step  they  have  their 


8         CONSUMERS'  CO-OPERATIVE  SOCIETIES 

first  experience  as  co-operative  consumers ;  then  they  ex- 
tend the  lines  of  their  co-operative  buying  to  household 
and  personal  needs;  discovering  the  value  of  this  method 
they  organize  a  store,  and  thus  they  have  engrafted  a 
consumers'  distributive  machinery  upon  their  agricultural 
producers'  enterprise.  Thus  have  grown  up  many  of  the 
farmers'  co-operative  societies.  Usually  the  consumers' 
society,  as  soon  as  it  is  ready  for  a  store,  is  organized  and 
capitalized  as  a  separate  undertaking. 

The  farmers  are  found  entering  into  many  fields  of  Co- 
operation besides  the  distributive  store.  They  have  been 
particularly  successful  with  insurance.  There  are  in  the 
United  States  about  2000  co-operative  fire  insurance  com- 
panies among  the  farmers.  They  carry  insurance  exceed- 
ing $5,250,000,000  on  property  valued  at  nearly  $7,000,- 
000,000.  This  insurance  is  carried  at  one  half  the  rate 
charged  by  the  profit-making  companies.  Hail  insurance  is 
also  provided. 

In  many  towns  the  farmers  have  a  co-operative  store, 
creamery  and  grain  elevator.  Banking  has  not  been  entered 
into  largely.  There  are  some  farmers'  societies  with  good 
buildings  in  the  town,  some  of  which  are  used  for  community 
centre  purposes.  A  laundry  connected  with  the  creamery 
is  one  of  the  many  farmers'  enterprises.  Some  societies 
own  flour  mills.  In  some  small  towns  in  the  middle  west 
and  northern  states  the  co-operative  societies  do  most  of 
the  business.  Co-operative  telephone  companies  developed 
among  the  farmers  of  the  middle  western  states  thirty-five 
years  ago.  The  telephone  monopoly  has  not  destroyed 
them. 

Without  reference  to  occupation  of  the  members  we  may 
take  a  general  view  of  the  distributive  societies  in  this 
country.  In  the  New  England  states  there  are  about 
seventy-five  distributive  societies.  A  few  are  the  old 
societies.     Most,  however,  were  established  in  the  present 


CO-OPERATION  IN  THE  UNITED  STATES         9 

century.  The  largest  single  group  is  that  of  about  thirty 
organizations  in  Eastern  Massachusetts ;  most  of  these  are 
composed  of  Finns.  The  societies  at  Fitchburg  and  May- 
nard  are  particularly  strong.  They  have  stores,  restau- 
rants, bakeries,  and  creameries.  In  the  middle  Eastern 
states  are  250  societies  located  chfefly  in  Pennsylvania 
among  the  coal  and  iron  workers  and  in  and  near  New  York 
City.  The  Central  States  have  about  100  societies  in 
Illinois.  A  lesser  number  are  in  Ohio  and  Indiana.  Most 
of  the  Illinois  organizations  are  connected  with  the  Central 
States  Co-operative  Society  which  has  a  wholesale  house  at 
East  St.  Louis,  Illinois.  This  has  a  turnover  of  $3,000,000 
a  year.  The  members  of  the  constituent  societies  are 
mostly  coal  miners.  In  Illinois  are  some  of  the  best  examples 
of  successful  Co-operation.  Societies  of  this  type  average 
about  250  members,  have  a  turnover  of  $160,000  a  year 
and  pay  savings-retunis  of  from  4«  to  7  per  cent,  quarterly. 
The  Illinois  societies  do  a  business  of  about  $10,000,000  a 
year. 

In  the  northern  part  of  Michigan,  Wisconsin  and  Minne- 
sota are  over  100  societies  composed  largely  of  Scandina- 
vians. The  Co-operative  Central  Exchange  at  Superior, 
Wisconsin,  is  a  wholesale  composed  of  fifty  of  these  societies. 
Besides  supplying  general  merchandise  it  manufactures 
the  peculiar  bread  and  biscuit  products  required  by  the  Fin- 
nish societies,  all  over  the  country.  This  organization  con- 
ducts a  school  for  the  training  of  co-operative  executives. 
Its  educational  work  is  most  effective. 

Most  societies  in  the  United  States  have  under  1000 
members.  Two  societies  in  Northern  Michigan,  established 
in  1890,  have  more  than  that  number.  One  of  the  success- 
ful younger  societies  of  that  district,  organized  in  1912,  has 
over  400  members,  owns  its  own  three  story  stone  building, 
operates  a  bakery,  two  meat  markets,  and  four  branch 
grocery  stores,  and  has  a  turnover  of  $300,000  a  year. 


10       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Among  the  northern  and  western  agricultural  states  are 
scattered  societies.  Kansas  has  275  consumers'  societies. 
Nebraska  has  about  the  same.  The  Farmers'  Exchange  at 
Omaha  is  the  central  wholesale.  These  societies  distribute 
groceries,  dry-goods,  clothing,  hardware,  machinery  and  all 
kinds  of  goods. 

The  Southern  States  have  a  few  scattered  societies,  but  the 
Movement  in  the  South  is  backward.  In  1878  the  National 
Grange  organized  the  Texas  Co-operative  Association.  Ten 
years  later  the  association  had  155  stores  and  6000  members 
and  was  doing  a  business  of  $2,000,000  a  year.  About  this 
time  the  Grange  organized  a  co-operative  educational 
association  which  established  a  co-operative  ischool  in 
Louisiana  fo|r  the  members'  children,  with  a  capital  of 
$8,000.  The  school  was  truly  co-operative  and  paid  sav- 
ings-returns to  patrons.  Societies  conducting  stores  were 
established  throughout  the  South  between  1877  and  1890 
by  the  Grange  and  the  Knights  of  Labour.  Most  of  these 
have  disappeared.  The  negroes  have  recently  become  in- 
terested in  Co-operation  and  are  establishing  distributive 
societies. 

The  Pacific  States  have  a  newer  movement.  The  general 
prosperity  of  the  people  and  newness  of  the  communities 
seems  to  have  militated  against  interest  in  Co-operation.  A 
scattering  of  societies  existed  in  California  the  latter  part  of 
the  Nineteenth  Century.  These  suffered  from  the  inex- 
perience and  apathy  of  the  members.  Some  were  finally 
closed  because  they  had  developed  a  good  big  surplus  and  the 
members'  fingers  itched  to  get  possession  of  it,  so  the  societies 
were  disbanded  on  account  of  their  success.  Lack  of  ed- 
ucation and  standardization  seemed  to  be  the  chief  trouble. 
In  the  early  part  of  the  present  Century  there  were  close 
to  a  hundred  societies  in  California.  By  1910  there  were 
only  about  a  score  left.  Then  came  a  growth  of  societies 
connected  up  with  an  unsound  method  of  centralized  control, 


CO-OPERATION  IN  THE  UNITED  STATES        11 

which  led  to  vicious  practices  and  failure  in  1922.  In  the 
meantime  a  true  co-operative  movement  sprang  up  in  the 
Pacific  States  in  the  form  of  independent  societies.  With 
these  as  a  nucleus  a  sound  development  is  making  progress. 

Much  publicity  has  been  given  to  the  fruit-growers, 
prune  and  grape  producing  organizations  of  the  Pacific 
Coast.  They  have  been  called  "co-operative."  Under  no 
circumstances  should  they  be  classified  with  Rochdale  co- 
operative societies.  The  former  are  profit-making  busi- 
nesses. Many  of  them  have  succeeded.  Their  success  may 
be  measured  by  the  following  fact  which  is  also  a  test  of 
their  character:  before  the  prune  producers'  co-operative 
was  organized,  the  people  were  able  to  buy  prunes  for  nine 
cents  a  pound;  but  so  successful  has  this  organization  be- 
come that  the  consumers  are  now  paying  twenty-nine  cents  a 
pound  for  the  same  prunes. 

Many  racial  groups  are  taking  an  active  part  in  the  pro- 
motion of  Co-operation  in  the  United  States.  A  group 
that  stands  out  most  eminently  for  its  idealism,  efficiency 
and  lo3'alty  is  that  of  the  Finns.  Their  societies  in  New 
England  and  in  the  Northern  States  are  most  successful. 
Other  racial  groups  which  are  making  their  contributions 
to  the  structure  of  Co-operation  in  this  country  are  the 
English,  Scotch,  Germans,  Scandinavians,  Jews,  Italians, 
Bohemians,  Poles,  Slovaks,  and  people  from  the  Balkan 
countries.  Many  societies  are  composed  largely  or  ex- 
clusively of  these  several  groups. 

The  retail  store  is  the  most  common  co-operative  enter- 
prise in  the  United  States.  There  are  about  3000  of  these. 
Co-operative  bakeries  have  been  promoted  especially  by  the 
Jews,  although  many  non-Jewish  societies  have  bakeries.  A 
baking  society  in  New  York,  two  in  New  Jersey,  and  one  in 
]\Iichigan  have  more  than  1000  members  each. 

A  form  of  Co-operation  which  is  unique  is  the  co-operative 
school.     There  are  three  of  these  in  New  York  which  are 


12       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

organized,  financed,  owned  and  controlled  by  the  consumers 
— the  students.  These  schools  prepare  students  for  college 
and  regents'  examinations  and  give  business  and  general 
cultural  courses.  The  faculty  is  selected  and  employed  by 
the  society  of  students  the  same  as  any  other  consumers' 
society  employs  its  experts,  and  is  entirely  under  the  di- 
rection of  the  students,  who  also  make  up  the  curriculum. 
Compared  with  the  profit-making  schools  in  tliis  field,  these 
schools  are  superior;  the  teachers  are  paid  better  and  the 
costs  to  the  students  are  less. 

Co-operative  housing  has  recently  been  attempted  on  a 
small' but  satisfactory  scale.  This  is  a  field  in  which  Co- 
operation is  urgently  needed  and  in  which  it  could  serve  the 
people  most  efficiently  in  this  country.  Aside  from  the 
many  spurious  enterprises,  there  are  some  genuine  co- 
operative housing  societies.  These  societies  have  built  the 
houses  and  own  them ;  the  members  take  leases  for  as  long 
a  period  as  they  please,  practically  having  possession  in 
perpetuity.  By  cutting  out  the  real-estate  speculator,  the 
exploiting  contractor  and  the  landlord,  these  co-operators 
enjoy  advantages  which  should  compel  the  recognition  of 
this  method  of  housing  as  most  economical  and  most  prac- 
tical. The  American  working-man  non-co-operator  pays 
one  fourth  of  his  wages  for  house-rent  and  the  German  work- 
ing-man co-operator  pays  one-eighth  to  one-fifteenth  of  his 
wages  for  a  better  home  than  that  in  which  the  American 
working-man  lives.  When  this  is  finally  understood  the 
people  of  this  country  should  eventually  see  where  tlieir  best 
interest  lies.  In  no  country  are  the  people  so  exploited  and 
so  at  the  mercy  of  the  land  speculator  and  the  landlord  as 
in  the  United  States.  The  people  are  rapidly  losing  their 
homes.  Co-operation  offers  them  the  chance  to  recover 
them. 

Co-operative  milk  distribution  has  recently  been  developed 
to  a  successful  point.     Some  societies  in  Massachusetts  have 


CO-OPERATION  IN  THE  UNITED  STATES       13 

contracts  with  the  farmers  to  produce  milk  for  them.  They 
collect  the  milk,  treat  it  in  their  own  creameries,  bottle  and 
deliver  it.  In  Minneapolis  is  a  co-operative  creamery — a 
consumers'  distributive  society — organized  in  1921.  They 
built  their  own  creamery-building  and  distribute  milk  to 
their  2000  members.  As  a  result  of  the  establishing  of  this 
society,  profit-making  dealers  in  the  city  of  Minneapolis  have 
been  compelled  to  reduce  the  price  of  milk  three  cents  a 
quart.  The  mere  presence  of  this  society  is  saving  the 
people  of  Minneapolis  $1,500,000  a  year.  The  cleanliness 
and  quality  of  the  milk  have  also  improved. 

Co-operative  banking  is  making  headway.  Massachusetts 
and  New  York  have  about  150  societies.  Ten  other  states 
have  co-operative  banking  laws.  Some  of  the  large  labour 
unions  are  now  energetically  promoting  this  cause. 

Other  expressions  of  Co-operation  in  the  United  States 
are  motion  picture  shows,  restaurants,  boarding  houses, 
hotels,  recreational  clubs  and  purchasing  agencies. 

As  yet  the  United  States  has  no  national  co-operative 
wholesale  society  such  as  is  to  be  found  in  about  twenty  other 
countries.  The  nearest  approach  to  such  a  commercial 
organization  are  the  district  wholesales  already  mentioned. 
These  are  owned  and  controlled  by  groups  of  local  societies 
which  they  iserve.  Nor  have  these  wholesales  entered  into 
production  except  in  the  one  instance  referred   to   above. 

There  is  a  borderland  of  Co-operation  in  which  are  many 
organizations  lacking  only  some  one  or  more  of  the  Rochdale 
principles  to  make  them  fully  co-operative.  In  this  class 
are  over  550  fraternal  life  insurance  societies  with  over 
9,000,000  members  and  $10,000,000,000  of  insurance  in 
force.  They  pay  about  $100,000,000  annually  in  benefiits. 
These  non-profit  organizations  are  co-operative  to  a  high 
degree. 

Co-operation  is  developing  with  the  endorsement  of  the 
Labour  Movement.    The  American  Federation  of  Labour  and 


14       CONSUMERS'  CO-OPERATI\^  SOCIETIES 

other  labour  organizations  are  giving  aid  to  its  promotioh. 
Most  of  the  societies  are  now  started  among  trade 
unionists  or  among  organized  farmers.  The  employment  of 
union  labour  is  insisted  upon  as  a  rule  in  the  better  class  of 
societies.  Co-operative  societies  succeed,  provided  that  they 
have  efficient  administration  and  obsei*ve  the  simple  rules  of 
genuine  Co-operation.  Although  a  majority  in  this 
country  have  neglected  education  and  strict  observance  of 
co-operative  rules  they  succeed  in  spite  of  their  mistakes. 
The  failures  among  them  are  much  fewer  in  proportion  to  the 
amount  of  business  than  among  profit-making  concerns. 

A  peculiarity  of  the  movement  in  this  country  is  the  fact 
that  it  is  endorsed  by  every  class  of  organization  laying  any 
claim  to  social  usefulness.  Every  type  of  labour  organiza- 
tion, with  the  rare  exception  of  some  of  the  branches  of  the 
Industrial  Workers  of  the  World,  is  friendly  to  Co-operation. 
The  Socialist  Party,  the  Communist  Party,  the  Republican 
Party  and  the  Democratic  Party  in  national,  state  and 
local  conventions  have  passed  resolutions  endorsing  Co- 
operation. The  Catholic  Church  and  the  Protestant  Church 
organizations  have  passed  such  resolutions.  The  Inter- 
church  World  Movement,  the  Federation  of  Churches,  and 
many  other  large  religious  organizations  are  among  these 
endorsers.  It  is  a  noteworthy  fact  that  in  the  United  States 
Catholic  leaders  are  giving  sympathetic  help  to  Co-opera- 
tion, and  advising  Catholics  to  join  the  regular  co-operative 
societies.  Every  effort  is  being  made  to  prevent  the  split 
in  the  movement  which  exists  in  Europe  where  the  Catholics 
are  outside  of  and  hostile  to  the  regular  co-operative  so- 
cieties. 

The  American  Movement  is  demonstrating  that  it  is  cap- 
able of  harmonizing  all  classes.  It  is  the  common  ground 
upon  which  all  who  hope  for  the  brotherhood  of  man  may 
unite.  That  there  is  such  a  force,  with  which  the  discon- 
tented as  well  as  the  contented,  the  radical  as  well  as  the 


CO-OPERATION  IN  THE  UNITED  STATES       15 

conservative  are  willing  to  unite,  is  a  hopeful  sign  for  the  se- 
curity of  society. 

No  country  ever  had  a  strong  and  substantial  growth  of 
Co-operation  until  it  had  a  national  co-operative  organ- 
ization. This  has  been  the  deficiency  in  this  country. 
To  meet  this  need,  The  Co-operative  League  was  organized 
in  1915  and  started  work  in  1916  with  headquarters  in  New 
York  City.  It  is  an  organization  which  collects  all  pos- 
sible information  concerning  Co-operation  in  the  United 
States ;  makes  surveys  of  failures  and  successes ;  publishes  in- 
formation; gives  advice;  standardizes  methods;  creates  def- 
inite policies  of  action;  prepares  bylaws  for  societies; 
drafts  bills  to  be  introduced  in  legislative  bodies ;  promotes 
favourable  legislation ;  sends  out  advisors  to  societies ;  pro- 
vides lectures ;  prepares  study  courses ;  conducts  a  school ; 
publishes  books,  pamphlets  and  periodicals;  and  in  every 
way  possible  promotes  practical  Co-operation.  The 
League  is  a  federation  of  co-operative  societies,  governed  by 
its  constituent  members.  Already  the  best  and  strongest 
of  the  societies  are  its  members.  Through  The  League  the 
United  States  Movement  is  connected  with  the  International 
Co-operative  Alliance  which  is  composed  of  the  similar 
national  unions  or  leagues  of  twenty-six  countries. 

The  First  National  Co-operative  Congress  held  under  the 
auspices  of  The  Co-operative  League  was  at  Springfield, 
Illinois,  in  1918;  the  Second  Congress  was  at  Cincinnati, 
Ohio,  in  1920 ;  and  the  Third  Congress  will  be  at  Chicago  in 
1922. 

The  great  need  in  the  United  States  is  for  the  fundamental 
educational  work  which  The  League  is  doing.  The  day  of 
propaganda  has  passed.  What  is  needed  is  standarized 
information  and  practical  guidance  based  upon  the  sound 
principles  of  Co-operation.  This  movement  has  been  so 
effectively  standardized,  that  success  and  failure  can  be 
predicted  and  controlled.     It  is  not  more  societies  that  are 


16       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

needed  but  more  knowledge  among  the  people  of  the  practical 
principles  and  technic  necessary  to  success. 

In  no  country  will  Co-operation  have  a  more  difficult  path. 
Profit-making  business  is  in  absolute  and  dominant  con- 
trol. But  the  fundamental  economic  changes  must  come — 
are  coming.  The  salvation  of  the  people  must  be  by  one  of 
two  methods.  They  must  either  learn  their  lesson  by 
suffering,  perhaps,  by  bloody  revolution,  with  all  of  the 
reaction,  delays  and  distress  which  these  have  in  store;  or 
they  must  learn  their  lesson  by  education — a  slower,  surer, 
evolutionary  way.  Which  of  these  the  people  of  this 
country  will  employ  on  their  way  to  emancipation  remains  to 
be  seen.  It  is  by  the  path  of  education  and  evolution  that 
the  Co-operative  Movement  would  lead. 

BlBUOOOAPHY   ON    Co-OPERATION    IK    THE    UNITED    STATES 

"Communistic  Societies  in  the  United  States,"  1895,  Charles  XordhofF. 

"History  of  Co-operation  in  the  United  States,"  1888,  Johns  Hop- 
kins University  Studies. 

"Co-operative  Savings  and  I^oan  Associations,"  1889,  Seymour  Dexter. 

"Co-operation  in  New  England,"  1913,  James  Ford. 

"Co-operative  Credit  for  the  United  States,"  1917,  Henry  W.  WolflF. 

"Co-operation,"  Vols.  I  to  VI,  published  by  The  Co-operative 
League. 

"Transactions"  First  (1918)  and  Second  (1920)  National  Congresses, 
The  Co-operative  League, 


CHAPTER     II 

THE    OBJECT     OP    A    CONSUMER  s' 
CO-OPERATIVE     SOCIETY 

In  a  broad  sense  a  consumers'  co-operative  society  exists 
every  time  that  a  number  of  persons  feeling  the  same  need 
join  together  collectively  to  satisfy  it  better  than  they  could 
do  by  individual  means.*  It  would  follow,  therefore,  from 
tliis  definition  that  every  consumers'  society  has  for  its  ob- 
ject production,  since  to  supply  any  need  it  is  necessary 
to  produce;  and,  indeed,  that  is  the  aim  of  consmners' 
co-operation,  but,  as  a  matter  of  fact,  it  only  achieves  this 
at  an  advanced  point  in  its  evolution.  In  its  beginnings  a 
consumers'  co-operative  society  is  satisfied  with  buying  the 
requirements  necessary  for  its  members ;  it  is  a  shopkeeper 
long  before  it  is  a  manufacturer.  Generally  a  beginning  is 
made  with  the  most  important  of  all  needs,  the  supply  of 
foodstuffs,  or  in  one  of  the  particular  branches  of  this  gen- 
eral need,  such  as  the  supply  of  bread,  wine,  groceries. 
Thus,  Monsignor  von  Ketteler,  Archbishop  of  Mainz,  said 
that  the  question  of  co-operation  is  summed  up  in  the  sim- 
ple question  of  food  supply;  but  that  does  not  belittle  it. 

If  the  consumers'  society  had  no  other  aim  but  to  enable 

*Author's  Note.  It  is  almost  impossible  to  give  a  precise  definition 
of  a  co-operative  society,  on  account  of  the  great  variety  of  objects 
aimed  at.  In  any  case,  in  our  opinion,  it  is  impossible  to  include  a 
consumers'  and  a  producers'  society  under  the  same  definition,  because, 
in  spite  of  the  apparent  identity  of  their  aims,  these  aims  are  really 
antagonistic,  as  we  shall  see  later.  However,  in  certain  Italian  books, 
by  WoUenborg,  Pantaleoni,  Valenti,  Mariani,  &c.,  we  find  subtle  and 
ingenious  analyses  which  attempt  to  embrace  all  forms  of  co-operation 
under  one  synthetic  formula. 

17 


18       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

the  working  classes  and  the  poor  to  feed  themselves  better, 
that  would  be  no  small  thing.  To  convince  oneself  that  that 
is  not  a  negligible  end  it  is  suflScient  to  consider:  (1)  That 
a  considerable  proportion  of  the  working-class  population 
(which  Messrs.  Charles  Booth  and  Rowntree  estimate  at 
27  to  30  per  cent,  in  English  towns)  do  not  get  the  mini- 
mum wage  necessary  to  maintain  life;  they  do  not  receive 
the  minimum  wage  necessary  to  buy  the  number  of  food 
units  required  for  the  maintenance  of  the  human  body.  (2) 
That  the  means  of  purchasing  at  the  disposal  of  the  work- 
man— already  very  small — are  further  wasted  by  his  ina- 
bility to  use  them  with  economy.  He  buys  in  small  quan- 
tities— a  halfpenny  worth  of  sugar  or  of  coffee — from  small 
hucksters,  whose  goods  are  sold  at  third  or  fourth  hand, 
deteriorated  in  quality  and  raised  in  price,  each  middleman 
having  taken  his  profit  on  the  way.  When  he  is  forced  to 
buy  on  credit  he  submits,  either  through  ignorance  or 
through  apathy,  to  all  the  frauds  wliich  the  fierce  struggle 
for  life  forces  on  hucksters  as  poor  as  himself.  He  has  even 
to  pay  an  insurance  to  the  shopkeeper,  in  the  form  of  in- 
creased prices,  against  the  insolvency  of  those  of  his  com- 
rades who  do  not  pay.  These  conditions  are  so  unfavourable 
that,  as  has  been  pointed  out  with  savage  irony,  "there  are 
not  many  rich  men  who  could  afford  themselves  the  luxury 
of  buying  under  the  same  conditions  as  the  poor." 

Consumers'  co-operation,  above  all  when  it  is  supported 
by  strong  purchasing  federations,  sweeps  away  all  this 
misery.  If  a  society  aims  at  cheapness  only  it  can  sell 
goods  well  below  current  commercial  prices,  and  even  if,  as 
is  generally  the  case,  it  sells  at  the  ordinary  trade  price,  the 
consumers  buy  goods  of  better  quality — more  nourishing 
food  and  more  lasting  clothes — and  also  gain  an  increase  in 
quantity  resulting  from  just  weights  used  for  bread,  for 
meat,  for  everything.  It  becomes  an  institute  of  social 
hygiene  of  the  first  order,  and  certainly  has  been  one  of  the 


OBJECT  OF  A  CO-OPERATIVE  SOCIETY         19 

factors  in  the  remarkable  decline  of  tuberculosis  in  England. 
In  spite  of  what  Monsignor  von  Ketteler  says,  consumers' 
co-operation  is  not  confined  to  the  supply  of  food  stuffs,  but 
is  able  to  extend  to  all  the  needs  of  human  life,  such  as 
clothing,  furnishing,  and,  above  all,  housing  (the  last  is  so 
important  a  category  that  the  societies  for  the  supply  of 
houses  are  generally  treated  separately  under  the  name  of 
building  societies).  In  the  United  States  there  are  hundreds 
of  towns  where  consumers'  co-operative  association  has  for 
its  object  the  creation  and  exploitation  of  a  telephone  sys- 
tem. In  New  York,  Brussels,  Berlin,  and  Milan  the  owners 
of  motor  cars  have  formed  co-operative  societies  to  supply 
themselves  with  petrol,  tires,  and  other  accessories,  in  pur- 
chasing which  the  consumer  has  been  scandalously  exploited. 
And  not  only  to  the  supply  of  material  needs,  but  also 
to  intellectual  and  moral  ones,  including  all  that  con- 
tributes to  well-being,  all  that  adds  to  the  comfort  and 
charm  of  life.  One  can  well  imagine — in  fact,  there  al- 
ready exist — co-operative  clubs,  co-operative  theatres,  co- 
operative newspapers,  and,  above  all,  co-operative  churches, 
that  is  to  say,  institutions  formed  and  maintained  by  those 
who  wish  to  gain  by  them,  to  instruct,  amuse,  and  edify 
themselves  in  common.^ 

What  makes  the  success  of  consumers'  co-operation  is 
the  very  fact  that  its  ends  are  most  varied.  Whatever  is 
wanted  of  it  can  be  obtained.  It  lends  itself  with  marvellous 
ease  to  any  social  aim,  even  the  most  diverse — sometimes,  it 
must  be  avowed,  the  most  antagonistic — so  that  we  must 
choose  between  them.  As  we  shall  see,  one  can  seek  in 
consumers'  co-operation  either  cheapness  or  an  increase  of 
income,  savings  for  the  individual  or  the  constitution  of  an 

1  In  greater  New  York  there  are  three  co-operative  schools  in  which 
the  students  (adolescent  and  early  adult)  employ  their  own  teachers 
and  administer  the  affairs  of  the  schools.  In  the  United  States  there 
are  also  two  or  three  moving  picture  theatres  owned  and  controlled  by 
the  patrons. 


20       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

inalienable  fund  for  social  benefits ;  but  one  cannot  seek  all 
these  results  at  the  same  time.  Thus  it  is  that  one  can  see 
conservatives  or  revolutionists,  bourgeois  or  workmen, 
coUectivists  or  anarchists,  Protestants  or  Catholics,  preach 
co-operation  in  turn,  although  with  very  different  objects. 

It  is  also  noticeable  that  besides  the  direct  aim  co-opera- 
tive societies  set  before  themselves  they  can  serve  indirectly 
all  aims  by  the  direction  in  which  their  funds  are  used.  Thus 
we  shall  see  the  socialist  co-operative  societies  in  Belgium 
and  in  the  North  of  France  using  their  funds  for  political 
propaganda.  Those  Jews  who  are  known  as  Zionists  have 
formed  a  consumers'  society  in  London,  of  which  30  per 
cent,  of  the  profits  are  devoted  to  the  development  of  the 
Zionist  movement,  that  is  to  say,  to  laying  the  foun- 
dations of  the  new  kingdom  of  Jerusalem ;  this  is  surely  an 
unforeseen  object  of  co-operative  effort — other  such  will 
arise.^ 

French  economists  who  have  concerned  themselves  with 
consumers'  co-operation  considered  at  first  that  its  only  end 
was  saving  (see  the  last  chapter  of  this  book)  ;  but  today 
that  idea  is  quite  out  of  date. 

In  what  does  co-operation  differ  from  mutuality?  Has 
not  that  also  for  its  end  the  providing  for  the  satisfaction  of 
certain  wants,  as  in  the  form  of  sickness  benefit,  old  age 
pensions,  burial  societies,  &c..''  Doubtless  both  are  sisters, 
in  that  both  spring  from  the  idea  of  mutual  aid  and  soli- 
darity, but  their  features  are  very  different.  Mutual  aid 
societies   fight   against   risks   which  threaten  human   life — 

2  One  large  co-operative  lodging  house  in  New  York  is  devoting  its 
surplus  to  a  fund  which  is  divided  between  Russian  Famine  Relief 
and  the  campaign  for  the  liberation  of  Political  Prisoners  in  the  United 
States. 

The  Central  States  Co-operative  Wholesale  Society  of  East  St. 
Louis,  Illinois,  put  all  its  facilities  at  the  disposal  of  the  United  Mine 
Worlters  who  raised  money  for  the  striking  miners  in  Kansas.  The 
Wholesale  shipped  more  than  40  carloads  ($200,000  worth)  of  food 
to  these  strikers  during  the  last  three  months  of  1921. 


OBJECT  OF  A  CO-OPERATIVE  SOCIETY         21 

sickness,  old  age,  and  death;  they  are  of  a  philanthropic 
nature,  and  were  formerly  called  "brotherhoods."  Co- 
operative societies  have  for  their  object  the  providing  for 
the  needs  of  every-day  life  by  new  economic  means ;  they 
are  businesses  in  the  true  sense  of  that  word  in  political 
economy.  This  difference  of  aims  is  so  real  that  French 
law  has  had  to  make  different  codes  for  the  one  and  the 
other.  Mutual  aid  societies  have  one  special  form  of 
legislation,  co-operative  societies  another;  for  the  one, 
capital  is  required,  for  the  other,  periodical  subscriptions 
are  enough.  When  it  is  a  question  of  societies  for  the 
insurance  of  goods — ^such  as  fire  or  live  stock  insurance — or 
even  credit  societies,  i.  e.,  societies  for  the  borrowing  of 
capital,  the  words  "mutual  aid"  and  "co-operative"  society 
are  used  almost  indifferently. 


CHAPTEE.     Ill 

THE      CO-OPEEATIVE      PROGRAM: 
CRITICISM     BY     ECONOMISTS 

The  immediate  aim  of  co-operative  societies  is  to  sat- 
isfy the  needs  of  their  members  better  and  more  economically 
than  is  done  by  existing  institutions ;  for  example,  if  the 
need  be  bread,  to  furnish  it  of  better  quality,  juster  weight, 
and  more  cheaply  than  the  bakers  can  supply  it.  Is  their 
claim  to  do  this  well  founded?  It  seems  at  first  sight  very 
daring,  for  is  it  probable  that  simple  consumers,  who  by 
their  very  definition  are  not  specialists,  could  be  capable  of 
making  bread  or  supplying  any  other  service  cheaper  and 
better  than  the  bakers  or  members  of  the  trade  ?  Is  not  that 
a  contradiction  of  the  great  law  of  the  division  of  labour 
and  of  exchange?  Is  it  not  a  return  to  a  state  of  savagery, 
to  the  life  of  a  Robinson  Crusoe,  or  to  a  feudal  family  who 
had  to  provide  for  all  their  needs  by  their  own  exer- 
tions ? 

That  is  the  objection  on  which  the  economists  lay  stress; 
yet  the  experience  of  nearly  all  countries  for  the  last  half 
century,  vouched  for  by  countless  successes,  has  proved  in- 
disputably that  the  claim  made  by  co-operators  is  well 
founded.  No  doubt  the  co-operative  business  is  heavily 
handicapped,  first  of  all  by  the  lack  of  technical  capacity, 
and  even  more  by  the  lack  of  personal  management,  of  "the 
master's  eye."  The  manager  lacks  the  stimulus  of  individual 
profit,  whether  he  be  a  salaried  ofiicial  or  even  a  philanthro- 
pist. 

But,  on  the  other  hand,  a  co-operative  society,  having 

22 


THE  CO-OPERATIVE  PROGRAM  23 

to  provide  for  the  needs  of  its  members  only,  can  do  so  with 
certainty,  particularly  if  its  members  are  conscientious  and 
lo3^al  in  purchasing  from  the  store.  It  has  not  to  run  the 
risks  of  bad  speculation  and  of  bad  stock  which  must  be  sold 
at  a  loss.  Besides,  the  co-operative  business,  as  it  does  not 
need  luxurious  premises — since  it  does  not  appeal  to  the 
public — and  as  it  runs  no  risks  of  bad  debts — since  it  does 
not  usually  sell  on  credit — is  freed  from  the  two  heaviest 
expenses  which  weigh  on  ordinary  commercial  enterprises. 
Finally,  a  co-operative  society  can  often  obtain  the  serv- 
ices of  honest,  capable,  and  devoted  managers  at  a  far  lower 
price  than  capitalist  enterprises  have  to  pay.  One  of  the 
former  directors  of  the  English  Co-operative  Wholesale 
Society,  Mr.  J.  T.  Mitchell,  in  replying  to  an  American 
economist,  Graham  Brooks,  who  asked  him  how  he  was 
satisfied  with  so  small  a  salary,  said,  "I  enjoy  the  esteem 
of  my  colleagues ;  I  have  great  power ;  I  have  great  faith  in 
the  co-operative  ideal.  These  things  satisfy  me."  By 
these  means  co-operation  brings  into  the  economic  order 
and  places  at  the  service  of  industry  a  new  and  very  power- 
ful factor — disinterested  energy.^ 

These  factors  are  enough  to  balance  all  the  disadvantages 
resulting  from  the  inexperience  of  its  managers,  and,  in  the 
struggle  against  the  traders,  have  given  the  advantage  to 

1  Many  of  the  American  societies  enjoy  all  these  advantages.  But 
by  far  the  larger  number  are  less  fortunate.  Though  luxurious  prem- 
ises are  not  needed,  too  many  inexperienced  boards  of  directors  lux- 
uriate in  excessive  overhead  expenditures.  Very  many  managers  have 
wrecked  their  societies  by  laying  in  huge  stocks  of  goods  at  peak 
prices  which  had  to  be  sold  later  at  a  great  loss.  There  are  far  and 
away  too  many  managers  in  the  American  societies  who  have  been 
taken  out  of  positions  in  private  stores  because  of  their  experience  in 
buying  and  selling,  who  know  and  care  nothing  about  co-operation,  and 
who  are  in  the  position  to  demand  the  same  wages  to  which  they  have 
been  accustomed.  Finally,  there  are  many  hundreds  of  the  societies 
in  the  United  States  which  do  sell  on  credit,  in  order  to  compete  suc- 
cessfully with  the  private  merchants.  This  becomes  almost  imper- 
ative during  times  of  unemployment  among  the  members. 


24.       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

co-operation.  In  fact,  contrary  to  general  belief,  one  does 
not  find  more  failures  among  co-operative  societies  than 
among  ordinary  traders,  and  where  statistics  are  procur- 
able they  show  that  co-operative  failures  are  fewer.  The 
co-operative  review  of  Hamburg  {Konsumgenossenschafts 
Rundschau),  in  its  number  of  18th  January,  1908,  com- 
mented on  the  official  statistics  of  failures  in  the  German 
Empire  for  1905-1906.  In  capitalist  enterprises  with  share 
capital  there  were  24  failures,  out  of  4,952  companies,  a 
proportion  of  4.85  per  1,000,  and  there  were  27  failures 
out  of  25,714  co-operative  societies,  which  is  a  proportion 
of  1.43  per  1,000  only.  True,  the  majority  of  these  co- 
operative failures  were  credit,  and  not  consumers',  societies, 
which  would  make  the  average  more  favourable;  but,  on  the 
other  hand,  it  should  be  noted  that  the  statistical  returns 
of  the  capitalist  concerns  refer  to  large  businesses  only,  and 
not  to  small  traders,  and  that  the  latter  are  the  ones  whose 
failures  are  most  frequent.^ 

As  for  saying  that  co-operative  organization  abolishes 
the  division  of  labour  and  brings  us  back  to  the  primitive 
times  when  each  man  was  constrained  to  produce  for  him- 
self everything  essential  for  his  needs,  it  is  true  in  so  far 
as  one  can  say  that  a  consumers'  co-operative  society  is  an 
enlarged  family  which — as  was  formerly  the  case,  and  is  the 
case  today  on  certain  farms — makes  its  own  bread  and 
jam,  and  which  also  spins,  weaves,  washes,  &c.  Yet  it  is 
not  the  consumer  himself  who  does  all  that,  but  specialized 
workers,  preferably  members  of  the  societies.  If  the 
division  of  labour  is  abolished  from  the  economic  point  of 
view  it  remains  in  full  force  from  the  technical  point  of  view, 
and  that  is  enough  to  ensure  progress. 

One  may  say  that  co-operative  association  confines  itself 

2  Many  guesses  have  been  made  as  to  the  proportion  of  co-operative 
failures  to  capitalistic  failures  in  thus  country,  but  no  accurate  figures 
are  available. 


THE  CO-OPERATIVE  PROGRAM  25 

to  transforming  that  co-operation  which  already  exists  in 
a  latent  state  in  all  human  society  into  conscious,  organized 
co-operation.  It  is  one  of  the  favorite  themes  of  econo- 
mists to  point  out  how  the  play  of  individual  efforts  pro- 
duces involuntarily  a  general  harmony;  unfortunately, 
facts  prove  that  this  harmony  is  often  but  a  frightful  dis- 
cord. The  co-operative  society's  role  is  to  make  each  man 
play  in  tune ;  it  is  the  conductor  of  the  orchestra. 

The  function  which  we  have  just  indicated  as  character- 
istic of  consumers'  co-operation — the  most  economical  satis- 
faction of  all  the  needs  of  life — suffices  for  the  greater  num- 
ber of  societies  in  the  world  today.  Moreover,  by  itself 
it  would  be  enough  to  make  co-operation  a  factor  of  the 
first  importance  in  economic  evolution  and  to  gain  for  it 
an  ever-increasing  number  of  supporters,  not  only  among 
those  workers  whose  wages  merely  suffice  to  maintain  life, 
but  also  among  the  middle  classes,  officials,  clerks,  or  per- 
sons of  small  iprivate  means  who  are  crushed  between  the 
increase  in  their  needs — owing  to  the  spread  of  luxury — and 
the  decrease  in  their  incomes,  by  reason  of  the  increase  in 
taxes  and  the  depreciation  of  Government  stocks. 

If  the  greater  number  of  co-operators  only  seek  from  co- 
operation the  means  of  living  better,  there  are  a  small  num- 
ber in  every  country  where  the  co-operative  movement  has 
made  headway,  who  seek  something  more  from  it — the 
attainment  of  greater  justice  in  economic  relations.^  It  is 
not  for  nothing  that  the  Rochdale  weavers  called  themselves 
the  "Equitable  Pioneers."'  They  did  not  content  them- 
selves with  seeking  from  co-operation  an  increase  in  comfort 
for  the  poorer  classes,  "the  chicken  in  the  pot"  promised  by 

3  Almost  all  of  the  societies  in  the  United  States  have  leaders  of 
this  kind,  even  though  the  membership  generally  is  money-minded. 
Any  society  which  is  entirely  lacking  in  such  idealism  faces  almost 
certain  failure;  it  cannot  compete  with  the  highly  organized  chain 
stores  with  their  inferior  quality  of  goods  at  reduced  prices,  their 
low  overhead  expense,  and  their  tremendous  buying  power. 


26       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

King  Henry  IV.  They  sought  to  find  in  it  an  instrument 
of  economic  transformation,  not  only  in  the  sphere  of  ex- 
change, but  also  in  that  of  production  and  the  division  of 
wealth.  A  co-operative  organization  for  the  distribution  of 
wealth  which  had  as  its  foundation  a  competitive  system  of 
production  would  form  a  highly  unstable,  perhaps  unin- 
habitable edifice.  They  also  sought  to  find  in  co-operation 
an  equitable  division  of  wealth,  enabling  the  consumers  to 
keep  for  themselves  all  the  gains  of  the  enterprise.  Their 
system  is  the  inauguration  of  a  new  system  of  the  division  of 
wealth ;  it  would  mean  that  capital  would  have  no  more 
profits.  Co-operation,  therefore,  means  nothing  less  than 
an  economic  system  destined  to  supersede  capitalism  by 
mutual  aid,  by  one  more  like  the  earlier  "domestic"  system 
(see  Chapter  xv). 

Co-operative  association  brings  with  it  the  hope  of  moral 
progress ;  but  in  abolishing  the  pursuit  of  profit  as  the  only 
real  motive  of  economic  activity — substituting  for  it  the  sole 
aim  of  satisfying  needs — whilst  abolishing  advertisement, 
lying,  cheating,  and  inducements  to  extravagance,  co- 
operation will  succeed  in  establishing  in  business  a  reign  of 
truth  and  justice;  in  short,  it  will  establish  the  *'fair  price." 
If  we  sought  to  define  the  object  of  co-operation  in  two 
words  these  last  would  be  enough. 

No  doubt  economists  will  reply  that  to  seek  such  an  end 
is  unscientific,  because  neither  co-operative  association,  nor 
even  the  State,  has  the  power  to  fix  a  "fair  price,"  or  any 
price.  Only  the  economic  factors  known  as  "the  law  of 
supply  and  demand"  are  able  to  do  this. 

Still,  the  fixing  of  prices  is  more  and  more  the  end  sought 
by  commerce  and  industry;  they  seek  to  safeguard  prices 
from  the  fluctuations  caused  by  competition.  It  is  for 
that  reason  that  the  fixed  price  has  become  the  rule  in  all 
big  markets,  and  that  the  manufacturers  themselves  tend 
more  and  more  to  compel  shopkeepers  to  sell  goods  bearing 


THE  CO-OPERATIVE  PROGRAM  27 

their  trade-marks  at  a  fixed  price,  by  forbidding  them  to  sell 
below  the  price  marked.  This  system,  which  has  spread 
widely  in  the  United  States — under  the  name  of  "price  main- 
tenance"— ^has  hardly  yet  appeared  in  France,  except 
amongst  chemists — for  patent  medicines — and  among  pub- 
lishers. 

But  the  fixed  price  has  nothing  in  common  with  the 
co-operators*  "fair  price";  instead  of  eliminating  profit  it 
increases  it,  making  it  a  direct  element  in  the  price  of  goods. 
If  this  system  becomes  general  the  consumer  "will  be  abso- 
lutely handed  over  to  the  discretion  of  the  producer.  That 
is  why  it  must  be  answered  by  the  co-operative  system,  which 
also  tends  towards  fixed  prices,  but  prices  fixed  by  the  con- 
sumer, and  forbidding  sale  above  the  price  marked. 

We  shall  see,  later,  by  what  developments  of  co-opera- 
tive association  it  is  hoped  to  produce  these  great  results, 
but  we  can  say  at  once  that  it  is  by  asking  co-operators  to 
give  up,  either  wholly  or  in  part,  the  individual  economies 
which  they  gain  from  co-operation,  or,  at  least,  to  deposit 
their  annual  savings  in  co-operative  hands  and  to  use  the 
collective  capital  thus  constituted  to  erect  factories,  buy 
land,  and  build  houses,  the  profits  from  which  will  naturally 
go  into  co-operative  funds,  so  that  co-operation,  like  the 
snowball,  will,  little  by  little,  swallow  up  the  profits  which  up 
to  now  have  gone  exclusively  to  those  who  possess  capital. 
It  is  not  a  question  of  expropriating  the  capital  already  in 
the  hands  of  the  capitalists,  but  one  of  forming  new  capital 
for  the  working  classes. 

Socialists  object  that  it  is  ridiculous  to  suppose  that  the 
wage-earning  classes  will  ever  be  able  to  raise  from  their 
wages — which  are  already  insufficient  to  support  them — new 
capital.  But  why,  since  they  admit  (not  without  exaggera- 
tion, but  that  is  of  little  importance)  that  all  existing  capital 
is  but  the  product  of  labour,  formed  by  the  labour  of  past 
ages,  why  not  admit  that  new  work  exerting  the  same  effort 


28       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

can  produce  as  much  capital  and  keep  it  for  itself?  And  if 
the  workers  gave  up  supporting  the  old  capital  and  turned 
themselves  solely  to  using  the  new  capital  which  would  be 
their  own,  then  the  old  capital  would  gradually  become  use- 
less, would  become  dry  and  empty  as  the  cocoon  after  the 
butterfly  has  taken  flight.* 

We  recognize  that  this  ideal  is  far  from  being  realized, 
and  that  co-operation  has  not  done  much  towards  reforming 
commercial  customs.  The  pursuit  of  bonuses — "divi- 
hunting,"  as  the  English  call  it — is  scarcely  less  keen  than 
profit-hunting,  and  there  are  even  societies  into  which  the 
worst  bourgeois  vices,  such  as  illicit  commissions,  have  intro- 
duced themselves.  But  that  happens  only  when  the  co-op- 
erative society,  instead  of  reforming  current  conditions,  has 
let  itself  become  saturated  by  them.  In  spite  of  such  cases  of 
unfaithfulness  to  the  co-operative  ideal  co-operation  none 
the  less  keeps  its  striking  characteristic  of  being  at  the  same 
time  highly  idealistic  and  very  practical.  It  is  at  once 
Martha  and  Mary,  Don  Quixote  and  Sancho.  It  follows  the 
blue  bird,  but  instead  of  seeking  it  in  the  Fortunate  Islands, 
shuts  it  up  in  a  shop.  It  sets  before  itself  the  reforma- 
tion of  the  world ;  it  begins  by  sweeping  the  pavement  before 
its  own  door  and  setting  its  own  house  in  order.  It  follows 
the  stars;  but  looks  before  it  leaps.  Professor  Marshall, 
the  eminent  economist,  said  in  his  speech  as  President  of  the 
Co-operative  Congress,  at  Ipswich,  in  1889:  "What  dis- 
tinguishes co-operation  from  every  other  movement  is  that 
it  is  at  once  a  strong  and  calm  and  wise  business,  and  a 
strong  and  fervent  and  proselytizing  faith." 

One  often  hears  the  somewhat  academic  question:  dis- 
cussed:    Is  co-operation  an  end,  or  only  a  means.?     For  the 

4  It  has  been  estimated  that  all  the  capital  in  circulation  in  the 
United  States  passes  thrice  annuaUy  through  the  hands  of  the  wage 
earners. 


THE  CO-OPERATIVE  PROGRAM  29 

great  majority  of  those  who  rally  round  the  co-operative 
movement  "bourgeois"  co-operation,  as  it  is  often  called, 
is  only  a  means,  a  means  of  living  better  without  spending 
more  or,  as  we  shall  see  later  on,  of  saving  without  denying 
oneself.  For  those  collectivists  or  anarchists  who  support 
co-operation  it  is  also  only  a  means,  a  means  of  preparing 
the  advent  of  the  collectivist  or  anarchist  regime  by  training 
and  arming  the  people  for  a  class  war;  by  supplying  them 
with  the  necessary  fortresses,  munitions,  and  technical  train- 
ing, in  order  that  on  the  morrow  of  the  great  revolution  the 
people  will  find  themselves  capable  of  maintaining  the  services 
of  production  and  distribution.  For  the  differences  between 
the  so-called  "middle-class"  co-operation  and  that  called 
"socialist,"  see  the  last  chapter  of  this  book. 

But  for  those  who  love  co-operation  for  itself,  the  true 
co-operators,  whom  critics  ironically  call  "mystics,"  co- 
operation is  an  end  in  itself.  Not  that  they  are  prepared 
to  rest  content  with  the  results  already  gained,  but  be- 
cause they  believe  that  co-operation  is  a  living  organism, 
and  that  the  results  achieved  already  contain  the  germs  of 
all  the  possibilities  to  be  wished  for  in  the  future,  as  the  seed 
contains  the  fruit  in  a  latent  state.  To  drop  metaphor, 
they  believe  that  each  co-operative  society  which  obeys 
the  laws  that  it  has  made  for  itself  already  constitutes  a 
little  world  organized  in  conformity  with  justice  and  social 
benefit,  and  that  it  is  sufficient  to  let  it  develop  spontaneously, 
either  by  growth  or  imitation,  to  realize  in  the  more  or  less 
distant  future  the  best  of  all  possible  worlds. 

In  reply  to  those  economists  who  laugh  at  these  preten- 
sions to  social  regeneration,  one  may  say  that  they  only 
amount  to  an  attempt  at  realizing  one  of  the  principles  of  a 
classical  school  of  economists  which  Bastiat,  a  few  hours 
before  drawing  his  last  breath,  expressed  in  these  words : 
"Political  economy  must  be  treated  from  the  point  of  view 


30       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

of  the  consumer."  The  co-operative  program  is  to  place  the 
consumer  in  a  position  of  economic  domination.  M.  Pan- 
taleoni  puts  this  question :  What  new  element  can  co-opera- 
tion bring  among  those  which  influence  supply  and  demand.'' 
We  answer:  None,  we  admit;  but  it  would  enable  the  law 
of  supply  and  demand  to  work  under  conditions  which  open 
competition  has  never  been  able  to  realize  (see  page  80), 

It  is  true  that  public  opinion,  especially  that  of  protec- 
tionists and  socialists,  considers  the  producer  far  more 
useful  economically,  and  morally  nobler,  than  the  consumer, 
because  he  almost  always  produces  for  others,  while  the  con- 
sumer always  consumes  for  himself  and  for  his  own  benefit, 
and  in  consequence  that  it  would  be  wrong  to  sacrifice  the 
former  to  the  latter. 

But  it  is  merely  playing  with  words  to  pretend  that  the 
producer,  in  the  existing  economic  organization,  lives  for 
others.^  If  the  baker  makes  bread  he  does  not  seek  to  feed 
his  customers,  but  to  make  profits ;  and  if  he  does  feed  them 
it  is  because  this  is  his  only  way  of  gaining  these  profits. 
It  is  only  in  co-operative  association  that  production  is 
organized  solely  with  the  view  of  satisfying  needs.  In  fine, 
it  is  not  a  question  of  sacrificing  either  the  producer  or  the 
consumer,  but  of  putting  each  in  his  proper  place  in  society. 
But  it  is  evident  that  the  producer  only  exists  for  the  benefit 
of  the  consumer,  the  baker  for  those  who  are  hungry;  it  is 
not  the  other  way  round.  It  is  this  truth,  too  often  falsified 
in  the  actual  economic  order  of  things,  that  the  consumers' 
society  seeks  to  re-establish. 

6  Or  that  the  employ^  in  the  bakery  works  for  others ;  he  works 
for  the  wages  which  will  enable  him  to  get  enjoyment  out  of  life. 
There  are  co-operative  bakeries  in  the  United  States  where  the  workers 
receive,  in  many  instances,  a  straight  wage  of  more  than  $70  per 
week  and  often  get  as  hi^  as  $100  by  working  overtime.  Attempts 
on  the  part  of  devoted  co-operators  to  induce  the  bakers'  union  to 
reduce  these  demands  have  been  unavailing;  the  leaders  of  the  unions 
and  even  the  majority  of  the  members  of  the  co-operative  society  in- 
sist that  these  bakers  shall  receive  from  co-operators  the  same  wage 
they  are  able  to  procure  from  private  bakers. 


CHAP  TEE      IV 

THE     HISTORY      OF      DISTRIBUTIVE 
CO-OPERATION 

(1)  /«!  Oreat  Britavn 

The  date  and  the  birthplace  of  distributive  co-operation  is 
well  known  to  every  one — the  21st  of  December,  1844,  at 
Rochdale,  near  Manchester — and  the  name  of  the  society 
which  was,  and  is  still,  the  parent  of  the  innumerable  family 
of  societies  engendered  by  its  spirit  and  after  its  model,  is 
"The  Equitable  Pioneers  of  Rochdale."  This  is  the  date  on 
which  the  first  store — a  mean  little  shop — ^was  opened  in 
Toad  Lane,  but  the  date  of  the  registration  of  the  society 
is  24th  October,  1844.  The  house  where  the  first  shop  was 
opened  is  still  in  existence,  and  it  is  hardly  credible  that  it 
does  not  belong  to  the  society,  which,  although  having  be- 
come prosperous,  does  not  own  the  house  where  it  was  bom. 
At  the  Co-operativ^  Congress,  held  in  1914,  a  vote  of  credit 
(£2,000)  was  passed  for  this  purpose,  but  the  war  has  so 
far  put  off  this  act  of  reparation.  These  pioneers  were 
weavers,  some  of  whom  were  disciples  of  Owen,  that  is  to  say, 
socialists,  others  were  Chartists,  but  all  of  them  had  the 
vigorous  confidence  of  the  English  mind  in  self-help,  or 
rather  in  mutual  aid.  It  took  them  one  whole  year  of  pain- 
ful effort  to  collect  the  little  capital  which  they  deemed  in- 
dispensable, and  after  many  desertions  twenty-eight  of  them 
remained  loyal,  with  a  capital  of  £28.  This  is  the  starting 
point  of  a  movement  which  to-day,  after  only  seventy-six 

31 


32       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

years,  has  penetrated  every  country,  and  unites  more  than 
twenty  millions  of  families. 

The  title  of  "Father  of  Co-operation"  is  often  given  to 
Robert  Owen,  who  was  still  living  at  the  time  of  the  Roch- 
dale Pioneers,  several  of  whom  were  his  disciples.  It  is  true 
that  this  socialist  (who  was  at  one  time  a  big  employer)  has 
very  admirably  defined  co-operation  by  this  formula :  "You 
must  become  your  own  merchants  and  your  own  manu- 
facturers ...  to  be  able  to  supply  yourselves  with  goods 
of  the  best  quality  and  at  the  lowest  price."  It  is  also  true 
that  he  popularized  the  word  "co-operation."  But  Owen, 
being  pre-occupied  in  realizing  complete  co-operation  in  his 
"towns  of  harmony"  under  the  form  of  communism — more 
particularly  that  of  community  of  land — was  always  some- 
what disdainful  of  co-operative  stores;  any  effort  towards 
the  partial  realization  of  co-operation  in  the  guise  of  a  shop 
he  regarded  as  being  more  likely  to  discredit  his  system  than 
to  herald  its  approach. 

However,  it  would  be  an  error  to  suppose  that  Rochdale 
was  the  first  society.  Prom  the  end  of  the  18th  century 
several  societies  could  be  mentioned.  The  existence  of  a  con- 
sumers' co-operative  society  has  been  discovered  in  a  village 
in  Oxfordshire,  at  Mongewell,  where  it  had  been  started  on 
the  initiative  of  the  Bishop  of  Durham,  in  1794.  Mr.  Max- 
well, in  his  History  of  Co-operation  in  Scotland^  claims  pri- 
ority for  a  little  society,  which  was  existing  in  1769  in  the 
village  of  Fenwick,  in  Ayrshire.  In  1820  a  league  was 
formed  "for  the  propagation  of  co-operation,"  and  up  to 
1840,  under  the  influence  of  Owen  and  his  disciples,  the 
propagandist  movement  for  co-operation  was  very  active. 
There  were  leagues,  journals,  congresses;  small  tracts  were 
distributed  by  the  million;  nothing  was  left  undone.  There 
were  several  congresses  of  co-operative  societies  during  this 
period  (1830-1833),  including  one  on  October  4th,  1831,  at 
Birmingham,    at   which   the    establishment    of   a   wholesale 


DISTRIBUTIVE  CO-OPERATION  33 

society  was  decided  upon,  and  the  duty  of  education  was  im- 
pressed on  co-operative  societies.  Another  was  held  in 
London  in  the  following  year.  Hundreds  of  societies  were 
founded  as  a  result  of  this  campaign;  in  1832  there 
were  3000;  even  a  wholesale  society  was  started  about 
this  time  in  Liverpool.  Some  of  the  societies  existing  at 
present,  notably  that  of  Sheemess,  which  dates  from  1816, 
are  older  than  the  Rochdale  one. 

But  aU  these  consumers*  societies  (distributive  societies, 
as  they  are  called  in  England)  had  one  fault  which  arrested 
their  development  and  ended  by  causing  their  extinction — 
they  were  philanthropic  movements  of  patronage,  almost  of 
charity.  They  were  created  out  of  a  feeling  of  pity,  because 
of  a  desire  to  relieve  the  miseries  of  the  working  classes, 
caused  by  the  terribly  low  wages  in  the  first  half  of  the  19th 
century,  when  machinery  was  taking  the  place  of  manual 
labour,  and  aggravated  by  the  high  price  of  bread,  which  the 
protective  duties  on  grain  continued  to  increase  for  the 
benefit  of  the  landlords — duties  which  the  noble  campaign  of 
Cobdcn  and  of  John  Bright,  who  was  a  native  of  Rochdale, 
was  soon  to  abolish.  Founded  with  the  capital  of  philan- 
thropists who  only  played  the  part  of  honorary  members  in 
the  society  and  did  not  use  the  so-called  co-operative  store  for 
themselves  ;  not  looking  for  anything  but  cheapness ;  not  seek- 
ing any  profits — which,  if  made,  were  distributed  among  the 
shareholders  and  not  among  the  customers,  or  sometimes  bur- 
ied in  an  inalienable  reserve  fund  which  would  only  serve  for 
visionary  schemes  for  the  benefit  of  future  generations — they 
did  not  attract  new  members  and  were  therefore  unable  to  de- 
velop, but  revolved  perpetually  in  a  vicious  circle.  Some- 
what later  another  method  of  employing  the  profits  was 
tried,  namely,  tliat  of  an  equal  distribution  among  all  the 
members;  but  this  was  not  more  happy  in  its  results.  As 
a  matter  of  fact,  this  system  of  equality  put  the  enthusiastic 
members  who   conscientiously  made  all  their  purchases  in 


34       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

the  common  store  on  the  same  footing  as  the  indifferent  ones 
who  never  came  there  at  all. 

However,  the  really  fruitful  idea  of  these  Rochdale  pioneers 
of  Charles  Howarth,*  was  that  of  distributing  the  profits, 
not  according  to  the  net  receipts  or  number  of  shares  or 
equally  among  all  the  members,  but  in  proportion  to  the 
trade  of  each  member,  this  trade  being  checked  in  the  simplest 
manner  by  means  of  dockets  given  of  equal  value  to  the  money 
received  at  the  cash-desk.  It  appears  that  other  societies 
had  tried  this  system  before ;  it  had  even  been  tried  in  a  bene- 
fit society  in  1827 ;  but  this  time  the  results  were  incalculable. 
It  was  the  fillip  which  set  in  full  motion  the  hitherto  inactive 
raachinery.f  Presently  we  shall  see  the  reason  why  this 
was  so. 

It  is  evident  that  through  the  adoption  of  this  new  system 
of  distribution  the  co-operative  movement  assumed  a 
more  individual  character  than  heretofore.  It  was  no  longer 
communistic  or  equalizing — as  Owen  had  desired — ^because 
every  one  was  recompensed  according  to  services  rendered. 
But  it  preserved  one  aspect  of  communism  by  asking  mem- 
bers to  leave  their  individual  dividends  as  deposits  in  the 
common  fund,  which  would  thereby  be  increased  and  em- 
ployed collectively,  at  first  for  the  development  of  the  society 
and  then  for  propaganda  and  social  education.  It  must 
be  admitted  that  of  these  two  tendencies — both  somewhat 
antagonistic  to  the  co-operative  movement — it  has  been  the 
latter,  the  individualist  tendency,  which  has  been  most  de- 

•  Author's  Note.  The  centenary  of  Charles  Howarth's  birth  (he 
was  born  in  1814,  and  died  in  1868)  was  celebrated  in  England  a  few 
years  ago.  One  of  his  biographers  calls  him  the  "Archimedes  of 
Co-operation."  He  was  a  working  weaver,  quite  uneducated,  but  fa- 
miliar with  the  doctrines  of  Owen. 

t  Author's  Note.  "The  History  of  the  Rochdale  Pioneers"  was 
written  and  published  in  1858  by  George  Jacob  Holyoake.  This  mar- 
vellous book,  re-edited  and  translated  into  every  language,  has  contrib- 
uted not  a  little  to  the  development  of  co-operation  in  many  parts  of 
the  world. 


DISTRIBUTIVE  CO-OPERATION  35 

veloped  up  to  the  present.  But  efforts  are  being  made  to  re- 
vive the  earlier  tendency. 

It  seems  then  only  right  that  history  has  awarded  the 
title  of  "Fathers  of  Co-operation"  to  the  twenty-eight 
weavers,  who  formed  the  Society  of  the  Equitable  Pioneers 
of  Rochdale.     They  have  doubly  merited  this  title: 

First,  by  the  broad  prophetic  manner  in  which  they  drew 
up  the  program  of  co-operation  for  their  time,  and  for  all 
time.  The  following  is  their  famous  manifesto.  At  least, 
this  is  as  it  was  reproduced  in  the  Pioneers'  Almanack  for 
1854.  It  seems,  however,  according  to  Miss  B.  Potter 
(Mrs.  Sydney  Webb)  that  this  program  had  already  been 
formulated  by  co-operators  at  Brighton  in  1827.  In  any 
case,  if  the  Pioneers  have  not  the  merit  of  being  the  first  to 
formulate  it,  they  have  had  the  greater  honour  of  realizing 
it  in  the  greatest  possible  measure. 

"The  objects  and  plans  of  this  Society  are  to  form 
arrangements  for  the  pecuniary  benefit  and  the  improvement 
of  the  social  and  domestic  condition  of  its  members,  hy  rais- 
ing a  sufficient  amount  of  capital,  in  shares  of  one  pound 
each,  to  bring  into  operation  the  follomng  plans  and  ar- 
rangements : — 

"The  building,  purchasing,  or  erecting  of  a  numiber  of, 
houses  in  which  those  members,  desiring  to  assist  each  other 
in  improving  their  domestic  and  social  condition,  may  reside. 

"To  commence  the  manufacture  of  such  articles  as  the 
Society  may  determine  upon,  for  the  employment  of  *wcJ^ 
members  as  may  be  without  employment,  or  who  may  be 
suffering  in  consequence  of  repeated  reductions  in  their 
wages. 

"As  a  further  benefit  and  security  to  tlie  members  of  this 
Society,  the  Society  shall  purchase  or  rent  an  estate  or 
estates  of  land,  which  shall  be  cultivated  by  the  members 
•who  may  be  out  of  employment,  or  whose  labour  may  be 
badly  remu/nerated. 


36       CONSUIMERS'  CO-OPERATIVE  SOCIETIES 

"Tha.t,  as  soon  as  practicable,  this  Society/  shall  proceed 
to  arrange  the  powers  of  production,  distribution,  education 
and  government;  or,  in  other  words,  to  establish  a  self- 
supporting  home  colony  of  united  interests,  or  assist  other 
societies  in  establishing  suxh  colonies. 

"That,  for  the  promotion  of  sobriety,  a  Temperance 
Hotel  be  opened  in  one  of  the  Society's  houses  as  soon  as 
convenient." 

Secondly,  because  they  were  not  content  merely  to  formu- 
late the  program  and  the  ideal  of  co-operation  and  to 
demonstrate  from  afar  the  goal  which  it  was  slowly  nearing, 
but  found  practical  means  of  realizing  it.  And  when  it  is 
remembered  that  these  rules  were  from  the  first  so  defi- 
nitely established  by  these  few  working  flannel  weavers  that 
the  experience  of  three-quarters  of  a  century  has  been  unable 
to  add  much  to  them,  and  that  thousands  of  societies  since 
formed  have  bound  themselves  to  copy  them  almost  literally, 
we  must  recognize  this  as  one  of  the  most  remarkable  phe- 
nomena in  economic  history.  Yet  it  passed  quite  unnoticed 
by  economists  of  that  time,  even  by  Mill.  The  co-operative 
movement  has  not  issued  from  the  brain  of  a  wise  man  or  a 
reformer,  but  from  the  very  life  of  the  people  themselves. 

We  now  give  the  most  striking  events  in  the  history  of 
co-operation  in  England  after  the  period  of  the  Pioneers. 
In  1852  and  1862  laws  called  the  Industrial  and  Provident 
Societies  Acts  were  passed.  The  first  Act  in  particular, 
which  was  the  Magna  Charta  of  co-operation,  gave  legal 
rights  to  the  societies,  hitherto  without  guarantees  or  corpo- 
rate existence,  and  whose  property  could  therefore  be  appro- 
priated by  the  first  member  who  wished  to  take  possession 
of  it.  This  law  was  largely  due  to  the  efforts  of  a  small 
group  of  religious  men,  known  as  the  Christian  Socialists — of 
whom  one  of  the  most  celebrated  was  the  clergyman  and 
writer,  Charles  Kingsley, — with  the  help  of  the  great 
economist,  John  Stuart  Mill,   although  tb§§e  men   sought 


DISTRIBUTIVE  CO-OPERATION  37 

their  ideal  in  productive  rather  than  distributive  co-oper- 
ation, and  more  among  the  French  socialists  than  among 
the  Rochdale  Pioneers.  For  the  English  Christian  Social- 
ists, as  for  the  French  socialists,  the  evil  to  be  fought  was 
the  wage-system,  while  for  Owen  and  his  school  it  was  the 
system  of  profit.  Nevertheless,  thanks  to  them,  co-opera- 
tion in  all  its  forms  gained  not  only  legislative  sanction,  but 
also  the  support  of  public  opinion.  Undoubtedly,  wage- 
earning  and  profit-making  are,  as  it  were,  the  two  sides  of 
the  same  coin.  Both  imply  the  subordination  of  labour  to 
capital;  but  whereas  producers'  association  seemed  to  be 
the  only  remedy  whereby  to  abolish  the  wage  system,  it  is 
consumers'  co-operation  which  leads  more  directly  to  aboli- 
tion of  profit  (see  Chapter  xvi). 

In  1864<  we  see  the  establishment  in  Manchester  of  the 
wholesale  federation  called  the  Co-operative  Wholesale 
Society,  or,  more  familiarly,  the  C.  W.  S.,  which  has  exer- 
cised a  powerful  influence  on  the  English  co-operative  move- 
ment, an  influence  which  is  increasing  from  day  to  day  {see 
Chapter  xi).  This  step  was  mainly  due  to  the  initiative  of 
Abraham  Greenwood,  one  of  the  survivors  of  the  Rochdale 
Pioneers.  The  C.  W.  S.  represents  the  economic  and  prac- 
tical side  of  co-operation.  This  institution,  which  is  now 
strikingly  successful,  only  succeeded  in  keeping  alive  after 
repeated  set-backs.  Wholesale  agencies  had  already  been 
opened,  following  on  the  first  Congress  at  Birmingham,  in 
1831,  and  later,  in  1850,  on  the  initiative  of  the  Christian 
Socialists.  But  the  ground  had  not  been  sufficiently  pre- 
pared, and  they  collapsed.  Besides,  up  till  the  Act  of  1862, 
such  federations  were  legally  non-existent. 

In  1869  the  Co-operative  Union  was  formed.  The  aff^airs 
of  this  body  are  administered  by  a  central  executive,  known 
as  the  United  Board,  which  acts  on  behalf  of  all  English 
co-operators ;  its  authority,  however,  is  purely  moral.  The 
Union  holds  annual  congresses,  which  are  like  sessions  of  a 


38       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

co-operative  parliament.  The  Co-operative  Union  is  to  the 
Co-operative  Wholesale  Society  what  the  soul  is  to  the  body. 

From  this  time  onwards  English  co-operation  has  no 
longer  a  history — as  is  said  of  happy  countries — ^because  it 
moves  forward  of  its  own  accord,  and  by  its  own  strength. 
Today,  co-operation  is  one  of  the  live  forces  of  the  country ; 
it  is  "a  state  within  the  State,"  as  Lord  Rosebery  said  at 
the  Co-operative  Congress  at  Glasgow,  in  1890.  As  we 
shall  see  in  the  following  chapter,  it  embraces  nearly  one- 
third  of  the  people  of  Great  Britain.  In  fact,  many  people 
fear  that  it  may  degenerate  in  proportion  as  it  grows  and 
spreads.  They  say  that  the  attempt  to  realize  the  ideal  of  a 
new  state  of  society  which,  like  the  Millennium  to  the  early 
Christians,  exalted  the  minds  of  the  Pioneers,  is  now-a- 
days  confined  to  the  search  after  more  comfort  or  large 
dividends — in  a  word,  they  say  that  co-operation,  instead 
of  being  a  religion,  is  no  more  than  mere  business.  In  fact, 
it  is  inevitable  that  the  more  a  movement  spreads  the  more 
its  original  virtues  tend  to  disappear  in  the  mass  of  the 
people;  nevertheless,  education,  for  which  English  co-op- 
erators make  considerable  sacrifices,  will  help  to  keep  co- 
operative enthusiasm  alive  in  the  coming  generations. 

We  have  given  these  details — necessarily  somewhat  cur- 
sory— of  the  origin  of  co-operation  in  England,  but  we 
do  not  mean  that  these  institutions  are  peculiar  to  Eng- 
land. They  are  to  be  found  in  every  other  country,  in  pro- 
portion as  these  countries  come  into  the  co-operative  move- 
ment. 

(2)  In  Belgium 

Meantime,  while  English  co-operation  of  the  Rochdale 
type  was  being  evolved,  in  Belgium  another  type  was 
emerging,  having  quite  a  different  aspect.  It  is  to  Belgium 
(or  rather,  to  certain  leaders,  Cesar  de  Paepe,  and  after 
him,  Anseele,  Bertrand,  and  Vandervelde)  that  the  merit  is 


DISTRIBUTIVE  CO-OPERATION  89 

due  of  having  united  in  one  co-operative  party  the  socialist 
school  and  the  workmen's  party,  which,  as  we  shall  see  later, 
had  become  separated  (see,  in  the  last  chapter,  the  pro- 
gram and  the  characteristics  of  socialist  co-operation). 
Not  that  the  co-operative  movement  has  assumed  such  large 
proportions  in  Belgium  as  in  England.  It  is  of  much  more 
recent  date,  being  traced  from  1880  only,  and,  having  taken 
from  the  beginning  a  socialistic  and  political  character,  it 
found  itself  checked  by  the  antagonism  of  other  political 
parties.  Catholic  and  Liberal,  which  have  rival  societies  in 
every  town. 

But,  on  the  other  hand,  this  struggle  has  acted  as  a 
stimulus  to  co-operation,  each  party  using  it  as  a  means  of 
influencing  the  people.  Thus,  the  characteristic  feature  of 
Belgian  co-operation  is  that  it  is  mixed  up  with  politics, 
which  is  not  at  all  the  case  in  other  countries — at  any  rate, 
up  to  the  present.  The  socialist  party  has,  above  aU, 
made  the  co-operative  store  not  merely  (as  Anseele  has 
said  in  his  well-known  phrase)  "a  fortress  whereby  to  bom- 
bard the  captalist  society  Avith  potatoes  and  41b.  loaves," 
but,  better  than  this,  a  club  house  for  the  people,  to  serve 
them  not  only  as  a  centre  for  supply,  but  for  meetings,  in- 
struction, recreation,  improvement.  It  has  made  co-opera- 
tion a  sort  of  patronage,  different  from  capitalist  patronage 
but  employing  the  same  methods,  and  we  might  even  say 
using  methods  which  no  other  patron  would  dare  to  do  to- 
day ;  for  instance,  the  member  has  to  pay  for  his  bread 
in  advance  each  week — ^by  buying  counters,  which  means 
that  the  society  borrows  from  the  workman  funds  for  its 
working  expenses — and,  moreover,  the  member  must  pay  an 
addition  of  one-third  of  its  real  price  for  his  bread.  But 
tlie  workman  will  bear  from  his  society  what  he  would  not 
bear  from  any  other  master.  He  willingly  allows  himself  to 
be  drawn  into  a  net-work  of  schemes  of  insurance,  provi- » 
dence  and  mutual  aid,  which  surrounds  him  completely  from 


40       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

his  birth  to  his  death,  and  follows  him  into  all  the  actions 
of  his  domestic,  working,  and  political  life.  He  is  taught 
how  to  vote  properly  and  not  to  drink  alcohol.  It  is  in 
order  to  keep  in  daily  touch  with  him  and  to  be  able  to 
control  his  actions  more  minutely  that  all  Belgian  co- 
operative societies  make  the  selling  of  bread  the  basis  of 
their  operations. 

(3)  In  France 

France  has  been  late  in  taking  up  distributive  co-opera- 
tion, though  the  social  evil  "competition"  was  being  un- 
ceasingly anathematized  by  all  French  socialists  in  the  first 
half  of  the  19th  century.  Therefore,  it  would  seem  only 
natural  that  co-operation,  'being  the  antithesis  of  competi- 
tion, would  appear  to  them  the  solution  sought  for.  But 
then,  they  were  seeking  the  solution  in  co-operation  from  the 
productive,  and  not  from  the  distributive  side. 

Indeed,  thoroughly  discouraged  by  their  failures,  the  work- 
ing classes  turned  their  backs  on  co-operation  in  all  its  forms. 
They  continued  to  dally  with  the  idea,  however,  as  a 
solution  for  the  social  question,  in  their  congresses  up  to 
that  held  at  Lyons  in  1878  ;*  but  this  was  the  last  sign  of 
interest  shown  by  them.  From  the  following  year  when,  at 
the  Marseilles  Congress,  under  the  initiative  of  Jules  Guesde, 
and  influenced  by  Marxian  collectivism — then  in  its  infancy 
in  France — they  changed  completely  and  resolved  that  co- 
operative societies  "could  by  no  means  bo  considered  a  strong 
enough  method  for  gaining  the  emancipation  of  the  labour- 
ing classes,"  they  voted  for  the  socialization  of  the  means  of 
production. 

Nevertheless,  here  and  there  distributive  co-operative  so- 

•  Author's  Note.  "Considering  that  the  condition  of  wage-earners  is 
but  a  transitory  state  between  serfdom  and  a  nameless  condition,  the 
•Chambres  Syndicales  ought  to  put  everything  in  train  for  the  estab- 
lishment of  general  societies  for  distribution,  credit,  and  production." 
This  was   a  resolution  passed   at   Lyons. 


DISTRIBUTIVE  CO-OPERATION  41 

cities  were  founded.  The  oldest  of  these  which  appears  in 
the  Co-operative  Almanac  is  the  Rurche  Stephanoise,  of  St. 
Etienne,  which  dates  from  1855.  But  there  were  others, 
even  older,  which  have  long  since  disappeared,  leaving  no 
traces.  The  idea  of  grouping  together  for  purchase  in 
common  is  too  simple  not  to  present  itself  often  to  the  mind 
and  not  to  be  acted  upon  at  times.  We  can  cite  from  1828 
the  existence  of  a  co-operative  bakery  called  Caisse  du  Pain, 
in  Alsace,  at  Guebwiller, 

The  great  burst  of  co-operative  enthusiasm  in  1848,  al- 
though it  spent  itself  almost  entirely  in  efforts  to  establish 
productive  societies,  did,  nevertheless,  bring  some  distribu- 
tive societies  into  existence ;  in  particular,  at  Lyons,  a  great 
centre  of  social  activity  at  that  epoch,  there  was  formed  the 
Societe  des  Castors.  Several  works  have  been  written  on 
the  history  of  co-operation  at  Lyons — one  by  M.  Flotard, 
in  the  Year  Book  of  Association,  published  in  1867,  and  one 
more  recently  by  M.  Godard,  entitled,  "The  Origin  of  Co- 
operation at  Lyons"  in  1904.  A  co-operative  shop,  with 
some  curious  features,  was  started  in  1835,  before  the  Roch- 
dale Pioneers'  Society  was  formed,  under  the  name  of  "Cow- 
merce  Veridique  et  Social,"  and  was  threatened  with  prose- 
cution by  the  authorities. 

During  the  period  1867  to  1883,  although  public  enthusi- 
asm was  more  concerned  with  productive  and  credit  associa- 
tions, there  were  about  one  hundred  distributive  societies 
founded,  among  others,  on  the  initiative  of  Benoit  Malon,* 
the  Revendication  at  Puteaux.  In  Paris,  in  1867,  there 
were  only  five  or  six  distributive  societies,  compared  with  50 
productive  and  more  than  100  credit  societies.     All  of  these 

*  Author's  Note.  Benoit  Malon  was  a  socialist  of  the  French  School, 
that  is,  he  was  not  very  sympathetic  toward  Marxianism,  but  rather 
sympathized  with  co-operative  ideals.  He,  nevertheless,  denounced  in 
vehement  terms,  "the  quacks  of  orthodoxy  in  the  economic  school,  who 
had  driven  the  workman  out  into  the  blind  alleys  of  co-operation." 
{Manual  of  Social  Economy.) 


42       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

were  affiliated  to  one  of  three  credit  organizations  (People's 
Banks) :  Le  Credit  aw  Travail,  La  Caisse  des  Associations 
CooperatvveSy  and  La  Caisse  d'Escompt  des  Associations 
popvlaires.  At  this  time,  co-operation  was  upheld  by 
such  well-known  economists  as  Leon  Say,  Jules  Simon, 
and  Walras,  but  it  had  a  more  moderate  program  than 
that  of  Rochdale;  and  the  law  of  1867,  which  we  shall 
examine  later,  was  due  to  this  movement.  Jules  Simon  made 
a  very  impassioned  speech  during  the  discussion  on  this  law. 

It  was  not  until  1885  that  distributive  co-operation  took 
a  conscious  existence — in  the  town  of  Nimes — thanks  to  the 
initiative  of  a  little  group  of  co-operators,  which  included  de 
Boyve,  Fabre,  and  several  workmen.  Since  then  its  prog- 
ress has  been  less  broken,  if  not  very  rapid.  The  first  con- 
gress, which  assembled  in  Paris  in  1885,  laid  the  foundations 
of  an  organization  somewhat  similar  to  that  which  we  have 
described  in  England.  A  Co-operative  Union  with  a  Central 
Committee,  a  federation  for  purchase,  annual  congresses, 
and  a  journal  were  started  about  this  time.  During  some 
ten  years,  the  societies  which  had  joined  the  Co-operative 
Union  remained  loyal  to  the  Rochdale  program.  The 
Central  Committee  found  a  general  secretary  full  of  enthu- 
siasm and  experience  in  the  person  of  Charles  Robert,  the 
apostle  of  profit-sharing;  but  a  premature  and  unfortunate 
attempt  to  form  a  federation  for  purchase  in  common  (see 
later  chapter  on  "Co-operative  Federations")  brought 
trouble  and  a  certain  amount  of  discouragement  into  the 
Union. 

In  the  interval,  the  example  of  the  Belgian  co-operative 
societies  and  the  counsel  of  their  chiefs  had  brought  back  a 
certain  number  of  French  socialists  to  the  co-operative  move- 
ment. They  found  in  co-operation,  if  not  a  solution  of  the 
social  problem,  at  least  a  means  of  action,  and  these  men 
began  to  form  distinctive  societies.  But  those  societies  of 
socialist  tendencies  in  Paris,  which  had  at  first  belonged  to 


DISTRIBUTIVE  CO-OPERATION  43 

the  Co-operative  Union,  soon  withdrew  from  it  because  they 
thought  the  Union  too  bourgeois  in  its  tendency,  and  too 
provincial  in  its  little  parliament,  and  in  1895  another 
group  was  founded  composed  entirely  of  Parisian  societies 
under  the  name  of  Bourse  cooperative  des  societes  social- 
istes  de  consommation.  (Co-operative  Exchange  of  Social- 
ist Consumers'  Societies.)  Socialists  say  that  this  secession 
marked  the  new  co-operative  era  in  France. 

In  this  statement  there  is  a  measure  of  truth,  and  some  in- 
gratitude. As  far  as  the  co-operative  program  is  con- 
cerned, the  socialist  seceders  have  added  nothing  to  that  of 
the  founders  of  the  Union ;  but  as  far  as  its  realization  is  con- 
cerned it  is  true  that  their  societies,  being  formed  exclusively 
of  workmen  and  animated  by  class  prejudice,  showed  them- 
selves more  active,  more  disciplined,  and  possessed  of  more 
solidarity.  Nevertheless,  the  period  which  followed  (which 
lasted  not  less  than  seventeen  years)  was  full  of  quarrels  be- 
tween the  socialist  group  and  the  so-called  bourgeois  or  neu- 
tral group  which  certainly  did  not  help  the  progress  of  co- 
operation in  France.  But  we  shall  postpone  to  another 
chapter  these  discussions  about  the  various  schools  of  co- 
operative  thought. 

Finally,  mainly  because  of  the  efforts  of  some  loyal  co- 
operators  of  both  parties,  and  also  because  of  the  pressure 
of  co-operators  in  other  countries — especially  Belgium  and 
England — which  was  exercised  at  every  national  and  inter- 
national congress,  the  co-operative  movement  in  France  suc- 
ceeded in  regaining  its  unity.  In  1912  the  two  groups  were 
in  accord  in  a  declaration  drawn  up  by  a  member  of  the 
Nimes  school.  (For  text  of  the  declaration  see  the  last 
chapter:  "Co-operation  and  Socialism.")  This  declaration, 
called  the  Covenant  of  Union,  was  ratified  separately  and 
simultaneously  by  each  federation  in  congress — unanimously 
at  the  Co-operation  Union  Congress,  and  at  the  Congress  of 
the  Socialist  Exchange  by  a  majority  of  307  to  30 — and  the 


4.4.       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Covenant  of  Union  was  finally  adopted  at  the  General  Con- 
gress at  Tours,  held  from  December  28th  to  30th,  1912, 
in  the  presence  of  numerous  delegates  of  foreign  co-operative 
federations  who  had  come  to  witness  tliis  very  happy  union. 

However,  there  were  here  and  there  a  certain  number  of 
societies  which  refused  to  accept  the  Union,  preferring  to 
break  away.  On  the  other  hand,  some  which  had  hitherto 
refused  to  federate  decided  to  do  so  from  the  time  when  they 
had  not  the  embarrassment  of  choosing  between  the  two  fed- 
erations. On  the  side  of  the  old  Co-operative  Union,  the 
irreconcilables  were  the  semi-patronal  co-operative  societies. 
On  the  side  of  the  socialist  group  the  dissentients  were  the 
large  societies  of  the  North  not  allied  with  the  "Guesdist" 
party,  that  is  to  say,  the  Marxian  societies.  (Jules  Guesde 
was  the  representative  of  Marxian  socialism  in  France.) 

It  is  fortunate  that  the  Union  was  already  established,  al- 
though it  had  not  borne  any  fruit  at  the  time  of  the  outbreak 
of  war.  It  is  owing  to  this  Union  that  co-operation  in 
France  has  been  able  to  survive  the  great  calamity,  and  even 
to  render  notable  services  to  the  country  and  the  co-opera- 
tive principle. 

(4)   In  Germany 

In  Germany  the  working  classes  for  a  very  long  time  re- 
fused to  believe  in  the  efficacy  of  distributive  co-operation 
because  they  were  imbued  with  the  idea  or  theory  of  what 
Lassalle  calls  the  brazen  law,  i.  e.,  the  ancient  theory  which 
teaches  that  any  reduction  in  the  cost  of  living  inevitably 
brings  with  it  an  equal  reduction  in  the  rate  of  wages,  and 
that,  consequently,  this  would  be  the  unfortunate  result  of 
the  success  of  a  distributive  co-operative  society.  For  this 
reason  the  co-operative  movement  in  Germany  was  first 
started  under  Schulze-Delitzsch  about  1850  in  the  form  of 
co-operative  credit,  and  in  this  form  it  has  had  a  wonderful 
development,  more  striking  even  than  that  of  consumers'  co- 


DISTRIBUTIVE  CO-OPERATION  4*5 

operation  in  England.  There  are,  in  fact,  20,000  co-opera- 
tive credit   societies,  both  rural  and  urban. 

As  co-operative  credit  is  the  most  conservative  of  all  forms 
of  co-operation  it  has  rallied  together  the  liberal  and  the 
bourgeois  parties,  and  even  the  small  traders,  who  have 
gained  great  advantages  therefrom.  It  was  a  sort  of  light- 
ning conductor  for  quite  a  long  time,  a  preventive  against 
the  extreme  socialism  of  Lassalle  and  Karl  Marx.  Thus, 
credit  societies  had  a  high  place  in  the  federations — notably 
in  the  General  Union  of  Berlin,  the  most  important  one 
founded  by  Schulze-Delitzsch — while  the  distributive  societies 
remained  in  a  secondary  position,  their  only  function  being 
(in  the  opinion  of  the  Union)  to  help  the  workman  to  save 
and  to  be  a  source  of  supply  for  the  credit  societies.  But 
the  federation  of  credit  and  distributive  societies  under  one 
banner  was  impeded  by  the  fact  that  the  small  traders  (who 
constituted  the  majority  of  the  co-operative  credit  societies) 
declared  that  the  development  of  distributive  societies  aimed 
at  their  extermination.  Futhermore,  the  General  Union, 
which,  inspired  always  by  the  spirit  of  Schulze-Delitzsch, 
stood  for  bourgeois  liberalism,  and  defended  the  middle 
classes,  was  unable  to  accept  the  socialist  labour  program  of 
social  reform  which  the  distributive  co-operative  societies 
both  in  Germany  and  France  were  beginning  to  teach.  At 
the  Congress  of  Kreuznach,  in  1902,  held  under  the  presi- 
dency of  Dr.  Criiger,  disciple  and  successor  of  Schulze 
Delitzsch,  a  resolution  of  the  German  Union  condemned  this 
program  as  being  too  socialistic. 

Consequent  on  this  motion,  the  larger  number  of  distribu- 
tive societies  resigned,  in  order  to  form  an  independent  Union 
with  its  head-quarters  at  Hamburg.  This  Union,  however, 
unlike  the  Belgium  group,  does  not  profess  the  socialist  faith ; 
it  has  not  allied  itself  w'ith  the  large  socialist  democratic 
party,  but  by  certain  regulations — such  as  prohibiting 
societies  from  selling  to  the  public  or  paying  interest  on 


46       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

shares — it  gives  to  its  societies  a  more  "anti-capitalist  and 
more  mutual  aid"  character  than  that  which  obtains  in  any 
other  country. 

Today,  Germany,  although  very  tardy  in  entering  the 
domain  of  distributive  co-operation,  advances  with  gigantic 
strides.  The  oldest  co-operative  distributive  society  on  the 
Rochdale  system  appears  to  have  been  formed  in  Neustadt, 
near  Magdeburg,  in  1864.  But  it  is  only  in  the  last  years 
of  the  19th  century  that  German  co-operation  began  to  ex- 
pand. In  this  field,  as  in  the  field  of  industry,  she  aimed  at 
outstripping  England,  and  at  her  former  rate  of  progress, 
would  probaby  have  succeeded,  as  we  shall  see  by  the  figures 
in  the  following  chapter.  This  is  interesting,  because  the 
superiority  of  which  Germany  boasts,  in  the  domain  of 
organization,  was  not  generally  recognized,  except  in 
so  far  as  it  concerned  compulsory  State,  or  military, 
organization.  Yet  here  we  have  a  kind  of  organization — 
free  and  spontaneous  co-operative  association — for  which 
Germany  displays  an  aptitude  not  less  remarkable  than  that 
of  the  individualist  English  people.  We  must  remember 
that  the  qualities,  and  even  the  faults  of  the  German  race — 
the  spirit  of  discipline  which  can  subordinate  private  to  gen- 
eral interests,  the  gregarious  instinct  which  moves  it  to  join 
together,  the  enormous  capacity  for  carrying  things 
through,  the  cult  of  organization,  even  the  very  worship  of 
the  kolossal — are  all  conditions  eminently  favourable  to  the 
success  of  co-operation  in  Germany.  As  we  shall  see  in  the 
following  chapter,  the  largest  distributive  societies  in  the 
world  are  to  be  found  in  Germany. 

Let  us  pause  here.  This  is  not  the  place  for  a  history 
of  distributive  co-operation  in  every  country  during  the 
second  half  of  the  19th  century.  It  would  be  very  monoto- 
nous, because  in  every  country  except  Belgium  the  Rochdale 
type  has  been  more  or  less  faithfully  copied.  It  would  be 
more  interesting  to  continue  this  history  later  on,  in  trying 


DISTRIBUTIVE  CO-OPERATION  47 

to  discover  in  which  countries  this  form  of  co-operation  has 
the  greatest  chance  of  success.  It  is  not  certain  that  the 
small  seed  imported  from  England  will  flourish  in  every 
country,  and,  at  any  rate,  it  is  perfectly  clear  that  its  devel- 
opment will  be  unequal,  as  we  shall  explain  in  the  following 
chapter. 


CHAPTER      V 

STATISTICS     AND      GEOGKAPHICAL      DIS- 
TRIBUTION     OF      THE      CO-OPERATIVE 
MOVEMENT 

When  it  is  remembered  that  the  type  of  association  created 
by  tlie  Rochdale  Pioneers  was  specially  contrived  to  meet 
one  particular  need  one  cannot  fail  to  admire  the  way  in 
vhich  this  little  seed  of  co-operative  effort  has  been  able  to 
adapt  itself  to  all  countries,  to  modify  itself  to  the  special 
circumstances  of  its  surroundings,  and  to  give  birth  to  a 
wonderful  variety  of  different  forms  of  activity.  It  flour- 
ishes in  all  countries  alike — in  frozen  Iceland  and  Labrador, 
and  in  the  burning  Islands  of  the  Pacific.  In  Palestine 
several  colonies  of  Zionist  Jews,  finding  themselves  cut  off 
from  all  supplies  b}'  the  war,  organized  themselves  into  co-op- 
erative societies,  in  order  to  be  able  to  live  and  await  relief. 

Unfortunately,  statistics  relating  to  consumers'  co-opera- 
tive societies  are  very  incomplete.  The  number  of  societies 
in  each  country  is  fairly  well  known,  but  there  are  not  many 
where  the  number  of  members  is  stated,  and  there  are  even 
fewer  where  that  most  important  figure,  the  turnover,  is 
known  with  any  degree  of  accuracy.  Thus  in  Italy,  where 
co-operation  has  developed  to  a  remarkable  degree,  there  are, 
as  yet,  no  exact  statistics.  Even  in  those  countries  where 
societies  are  grouped  in  federations  there  are  a  certain  num- 
ber of  "wild  men"  who  do  not  supply  the  returns  sought,  so 
that  the  figures  given  are  below  the  actual  figures  and  ought 
to  be  increased  by  an  unknown  quantity.^     It  is  only  in 

1  This  condition  prevails  to  a  marked  degree  in  tlie  United  States. 
Many  of  the  societies  are  isolated,  out  of  the  channels  of  co-operative 

48 


GEOGRAPHICAL  DISTRIBUTION  4*9 

Great  Britain  and  Switzerland  that  co-operative  statistics 
are  more  or  less  complete,  because  in  these  two  countries 
alone  almost  all  the  societies  are  grouped  in  a  national 
federation. 

Subject  to  this  reservation,  the  following  figures  may  be 
given  for  1914*,  the  last  normal*  year: — 

Number  Number  of  Proportion  Turnover 

Country.  of  Members  (in  per  1,000  (in 

Societies.  Thousands).  Inhabitants,  thousands). 

British   Isles    ...  1,385  3,054  264  £88,000 

Germany     2,375  2,000  (?)  121  2g,000(?) 

Russia    13,000  1,500  34  32,000 

France     3,261  881  90  12,840 

Austria    1,471  423  70  7,200 

Italy      2,481  400   .  43  7,200(?) 

Switzerland     396  276  290  5,240 

Denmark     1,560  250  350  6,000 

Hungary     1,300  200(?)  40  3,000 

Belgium     205  170  90  1,920 

Sweden    608  153  108  2,440 

Poland     1,500  120  33  1,680 

Holland    135  99  72  1,040 

Finland    512  97  120  2,520 

Spain    200  40  30  800 

Norway    172  39  42  550 

These  figures  have  been  much  affected  by  the  war,  though 
not  generally,  as  might  have  been  expected,  adversely  af- 
fected.    On  the  contrary,  in  almost  every  country,  belligerent 

thouglit  and  feeling  as  it  circulates  among  the  societies  aflSliated  with 
The  Co-operative  League  or  with  one  or  another  of  the  local  federa- 
tions or  wholesales.  The  officers  of  such  associations  do  not  answer 
or  even  acknowledge  requests  for  information.  Some  of  these  have 
been  hunted  down  by  members  of  the  staff  of  The  League  or  other 
interested  persons.  But  the  country  is  so  large  and  the  faithful 
workers  so  few  that  scores  of  co-operatives  come  into  existence,  live 
and  die  without  being  known  to  the  American  Co-operative  Move- 
ment. 

*  Author's  Note.  These  figures  are  taken  from  co-operative  journals, 
from  the  "International  Co-operative  Bulletin,"  and  from  reports  pre- 
sented by  delegates  to  the  Congress.  The  mark  of  interrogation  in  some 
cases  indicate  those  whose  details  are  uncertain  and  sometimes  con- 
tradictory. We  have  classified  the  countries  in  the  order  of  the  figures 
in  the  second  column,  which  gives  the  number  of  members.  The  number 
of  societies  indicated  in  the  first  column  is  not  really  a  sign  of  superior- 


50       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

or  neutral,  there  is  a  considerable  increase,  and  in  some, 
notablj  Finland,  Russia,  Georgia,  and  Ukrania,  the  increase 
is  enormous.  This  is  an  unexpected  phenomenon.  It  can 
be  explained  as  regards  neutral  countries  by  the  fact  that 
co-operative  societies  have  shared  in  a  general  prosperity ; 
but  one  would  have  expected  that  in  belligerent  countries, 
where  almost  the  whole  adult  population  has  been  mobilized, 
a  marked  decrease  in  consumption  would  have  been  found. 
But  those  who  remained  at  home  increased  their  consumption 
on  account  of  the  increase  in  wages  and  allowances,  and 
further,  the  number  of  members  of  the  societies  has  increased, 
because  the  general  raising  of  prices  has  forced  the  publ5c 
towards  co-operation.  It  is  possible,  however,  that  these 
increases  will  not  be  permanent.* 

ity — rather  the  contrary — as  it  shows  that  the  societies  are  very  small. 
However,  it  has  a  certain  value,  as  it  shows  how  co-operation  has 
spread  over  the  country.  The  third  column  shows  the  number  of  co- 
operators  per  1,000  inhabitants  (multiplied  by  four,  because  each 
co-operator  stands  for  a  family,  sometimes  a  very  large  family;  there  is 
very  rarely  more  than  one  member  in  the  same  family).  This  column 
is  the  best  proof  of  the  penetration  of  the  co-operative  spirit  in  the 
country,  which  from  this  point  of  view  ought  to  be  taken  as  the  touch- 
stone of  co-operative  progress  in  any  co-operative  classification.  The 
high  place  the  small  countries — Denmark,  Switzerland,  and  Finland — take 
in  this  classification  is  worthy  of  remark.  The  fourth  column,  giving 
the  total  sales,  is  more  or  less  equivalent  to  the  second,  because  it  is 
natural  that  the  amount  of  sales  should  be  proportionate  to  the  number 
of  customers.  However,  the  parallel  is  not  absolute,  because,  as  we 
must  not  forget,  in  many  countries  co-operative  societies  sell  not  only 
to  their  members,  but  also  to  the  general  public. 

*  Author's  Note.     The  following  are  the  most  recent  figures    (of  the 
year  1920  or  1921)   for  the  principal  co-operative  countries: 

Number  of  Number  of 

Societies.  Members. 

Russia    50,000(?)  15,000,0G0(?) 

British   Isles    1,500  4,559,000 

Germany    1,366  2,832,000 

France   4,000  2,300,000 

Switzerland     500  369,000 

Finland    600  375,000 

Denmark 1,700  376,000 

It  is  useless  to  give  the  figures  for  the  turnover,  as  fluctuations  in  the 
value  of  currency  deprive  these  figures  of  all  significance.     It  is  of  little 


GEOGRAPHICAL  DISTRIBUTION  51 

We  must  add  to  our  list  some  thousands  of  consumers' 
co-operative  societies  in  the  Balkan  States  and  Portugal, 
and,  outside  Europe,  about  a  thousand  in  the  United  States, 
Canada,  Japan,  India,  Australia,  and  even  in  snowbound  Ice- 
land. The  number  of  consumers'  societies  in  the  whole  world 
is  at  least  thirty  thousand,*  having  about  ten  million  ~  mem- 
bers and  a  turnover  of  nearly  200  million  pounds.  Besides 
this,  it  must  not  be  forgotten  that  each  co-operator  usually 
represents  a  family  (since  unmarried  people  have  compara- 
tively little  reason  for  joining  a  co-operative  society),  and 
working-class  families  are  generally  large,  so  that  these  ten 
million  co-operators  represent  a  population  of  from  40  to  45 
million  persons,  the  equivalent  of  a  large  State. 

As  for  the  turnover,  compared  with  the  trade  of  the  woi'ld, 
which  runs  into  thousands  of  millions,  it  is  clearly  only  an 
infinitesimal  portion;  it  hardly  amounts  to  8s.  per  head  for 
Europe !  Still,  if  one  remembers  that  the  co-operative  move- 
ment is  not  yet  three-quarters  of  a  century  old — and  how 
short  a  time  that  is  in  the  history  of  the  world:  less  than 
the  life  of  a  man — these  results  will  not  appear  despicable, 
but  rather  of  a  kind  to  justify  the  hopes  of  co-operators. 

A  few  words  about  the  principal  co-operative  countries. 
They  advance  at  very  different  speeds  along  the  road  to  co- 
value  to  record  the  billions  of  marks  or  crowns  for  Germany  or 
Austria,  and  the  trillions  of  roubles  for  Russia!  The  total  turnover 
of  the  co-operative  societies  of  Great  Britain  was  250,000,000  pounds 
(it  should  be  remembered,  however,  that  the  pound  has  also  depre- 
ciated in  value) ;  and  the  turnover  of  the  Swiss  societies  was  337,000,000 
francs  (the  Swiss  franc  has  fluctuated  as  little  as  the  American  dol- 
lar). 

Even  if  the  figures  for  the  turnover  of  all  countries  were  expressed 
in  gold  (or  in  dollars)  it  would  be  noted  that  the  increase  over  the 
figures  of  1916  is  comparatively  little,  while  the  growth  in  the  number 
of  members  was  considerable, 

2  Figures  published  at  the  Basel  Congress  in  1921  showed  25,000,000 
members  of  co-operative  societies. 

*  Author's  Note.  This  list  does  not  comprise  the  following  cate- 
gories of  co-operative  societies  which,  properly  speaking,  are  not  con- 


52       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

operation.  Far  and  away  in  the  first  place  comes  Great 
Britain,  and  this  is  not  surprising,  after  what  we  have  seen 
in  the  preceding  chapter  on  the  history  of  co-operation. 
First  of  all,  the  United  Kingdom  excels  by  the  number  of  its 
co-operators — more  than  four  million  families  (4,500,000  in 
1920) — which  represents  about  one- third  of  the  population 
of  Great  Britain,  leaving  out  Ireland,  where  consumers'  co- 
operation is  of  little  account.  There  are  certain  counties 
where  the  proportion  of  co-operators  rises  to  a  half  and  even 
three-quarters  of  the  population.  There  are  big  cities,  such 
as  Leeds,  or  small  towns,  such  as  Kettering  or  Desborough, 
where  almost  the  whole  population  are  co-operators.  (Re- 
port of  General  Co-operative  Survey  Committee,  Co-opera- 
tive Union,  Manchester,  1916.) 

All  the  societies  are  strong,  for  their  average  membership 
is    over   3,000    (575    in   France).     There    are    100    socie- 

sumers'  associations,  although  they  really  come  under  the  definition  we 
gave,  namely: — 

(o)  Co-operative  building  societies,  that  is  to  say,  societies  for  the 
supply  of  houses,  to  the  number  of  more  than  10,000,  of  which  the 
large  majority  (7,000)  are  in  the  United  States  and  England,  nearly 
300  being  in   France.     We   shall  speak  of  these  later  on.3 

(6)  Co-operative  agricultural  and  urban  societies  for  the  purchase 
of  fertilizers  and  raw  materials,  which  number  at  least  20,000.  There 
are   6,000  of  these   societies  in   France.* 

Nor  does  it  include  co-operative  credit  societies,  both  rural  and 
urban,  which  number  about  50,000  to  60,000  (18,000  in  Germany  and  as 
many  in  Russia),  although  their  object  is  to  satisfy  a  very  pressing 
need  of  their  members,  namely,  the  need  of  money. 

According  to  the  Russian  economist,  Tugan  Baranowski,  who  died 
1919,  there  were  at  that  date  160,000  co-operative  societies  of  all 
classes  with  30,000,000  members. 

3  The  Building  and  Loan  Associations,  to  which  Professor  Gide  here 
doubtless  refers,  are  not  strictly  co-operative.  They  do  pretend  to  do 
away  with  private  profit,  but  they  are  not  democratically  controlled, 
nor  are  there  any  co-operative  features  to  the  houses  or  communities, 
once  they  are  built.    They  are  semi-democratic  credit  associations. 

4  There  are  also  thousands  of  these  in  the  United  States.  Obviorusly 
they  are  not  consumers'  associations;  they  enable  producers  to  pro- 
cure their  raw  materials  more  economically.  With  them  should  be 
classed  such  associations  as  the  Artists'  Co-operative  Store  in  New 
York  in  which  brushes,  paints,  etc.  are  sold,  the  Dentists'  Co-operative 
society  of  New  York,  and  similar  societies. 


GEOGRAPHICAL  DISTRIBUTION  63 

ties  with  more  than  10,000  members,  of  which  one,  Leeds, 
has  190,000  members  and  a  turnover  of  £3,000,000.  The 
turnover  of  these  societies  shows  their  strength,  no  less  than 
their  membership.  In  1914  the  turnover  was  more  than  88 
million  pounds,  which  represents  £64,000  per  society  (£4,000 
in  France)  and  an  average  of  £29.  10s.  per  member.  The 
figures  for  1920  are  much  higher,  owing  to  the  rise  in  prices 
(as  we  have  said  £254,000,000  in  all,  equal  to  £170,000  per 
society,  or  £56  per  member).  This  average  is  far  above  that 
of  any  other  country  (in  France  the  average  is  about  700 
francs,  which  are  worth  in  present  currency  about  £14. 
This  high  average  implies  two  things;  first  of  all, 
that  the  societies  are  not  merely  grocery  shops,  but  supply 
every  kind  of  goods,  and,  secondly,  that  the  members  are  very 
loyal  to  their  store.  This  is  a  rare  quality,  and  is  one  of 
the  surest  tests  of  co-operative  zeal.  There  are  a  good  num- 
ber of  English  workmen  who  bring  all  their  wages  to  their 
own  shop  and  spend  scarcely  any  money  outside  of  it. 

In  the  above  figures,  sales  made  by  the  English  and  Scot- 
tish federations  to  their  societies  (totalling  more  than  130 
million  pounds)  are  not  included,  as  that  would  involve  a  du- 
plication ;*  neither  are  the  figures  for  the  co-operative  bank, 
which  has  a  turnover  of  more  than  400  million  -pounds,  nor 
those  of  the  Co-operative  Insurance  Society,  with  its  40  mil- 
lion pounds'  worth  of  risks.  If  the  whole  were  added  together 
they  would   reach  a  total  of  about   1,000  million  pounds. 

Germany,  as  we  have  said,  is  above  all  the  home  of  co-oper- 
ative credit  societies  (18,000  with  more  than  2,500,000  mem- 
bers), but  still,  as  regards  co-operation  for  consumption  it 
takes  second  place,  though  it  made  great  strides  in  the  years 
before  the  war,  at  a  rate  of  progress  much  higher  than  that 
of  Great  Britain,  as  may  be  seen  from  the  following 
figures : — 

•  Author's  Note.    See  page  159,  chapter  on  "Purchasing  Federations." 


54       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Great  Britain.  Germany. 

Members  Members 

(in  thousands).  Sales.  (in  thousands).  Sales. 

1902  1,709  £50,040,000  575  £7,040,000 

1914   3,054  £88,000,000  1,717  £26,360,000 


Increase  178  p.  100  176  p.  100  300  p.  100  374  p.  100 

It  is  clear  that  during  this  last  decade  the  German  societies 
have  just  tripled  their  number  of  members,  and  almost  quad- 
rupled their  turnover,  while  British  societies  have  only  in- 
creased in  each  case  by  about  75  per  cent.®  It  is  true  that  in 
making  this  comparison  we  must  take  into  consideration,  first, 
that  in  every  movement,  as  in  every  organism,  increase  is 
greater  in  early  3-outh,  and,  secondly,  that  the  population  of 
Germany  is  half  as  big  again  as  the  population  of  Great 
Britain  and  therefore  offers  a  bigger  field  for  extension. 
Consumers'  Co-operation  in  Germany  is  still  far  behind  that 
of  Great  Britain,  for  the  total  number  of  members  is  about 
half,  and  the  turnover  not  a  third  of  that  in  Britain.*  Still 
there  are  many  important  societies  there,  to  which  the  epithet 
"colossal"  may  be  applied  without  exaggeration,  notably 
that  of  Hamburg  with  80,000  members,  Leipzig  with  65,000, 
and  above  all  that  of  Breslau,  which  has  100,000 
members.^ 

6  Germany  now  has  almost  as  many  members  as  the  British  move- 
ment. Inasmuch  as  little  more  than  half  of  the  German  societies  are 
affiliated  with  the  Central  Union,  precise  figures  are  not  available; 
but  the  leaders  estimate  a  membership  of  about  4,500,000  for  the 
societies  of  the  whole  country. 

*  Author's  Note.  The  only  trustworthy  figures  are  those  of  the 
societies  affiliated  to  the  Hamburg  Federation  (see  page  45).  These 
are  the  ones  which  appear  in  the  comparative  table  above.  But  this 
Federation  only  included  1,200  societies  out  of  more  than  2,000  existing 
in  Germany  at  that  date  (1914).  The  figures  in  the  tables,  therefore, 
do  not  represent  the  real  total.  At  the  same  time  we  must  guard 
against  believing  that  they  might  be  doubled,  because  the  societies  be- 
longing to  the  Hamburg  Federation  are  the  most  powerful  in  Germany. 

7  In  1921  the  H'lnil  1  ig  Society  had  120,724  members,  and  the  Vienna 
Society  152,518  members. 


GEOGRAPHICAL  DISTRIBUTION  55 

Moreover,  generally  speaking,  the  average  of  sales  per 
member  is  much  smaller  in  Germany  than  in  Great  Britain, 
being  only  £15.  lis.,  which  is  explained  less  by  the  disloyalty 
of  members  than  by  the  fact  that  these  societies  generally 
confine  their  trade  to  groceries,  as  in  Breslau. 

France,  as  we  have  already  seen,  comes  first  after  Russia 
as  regards  the  number  of  its  societies,  but  there  is  nothing 
for  her  to  boast  about  in  this,  as  the  large  number  of  so- 
cieties is  not  a  sign  of  strength,  but  of  weakness ;  it  is  simply 
a  sign  of  the  scattered  and  overlapping  nature  of  the  so- 
cieties. As  far  as  France  is  concerned,  for  a  long  time  past 
the  only  statistics  published  have  been  those  compiled  by  M. 
Daude-Bancel,  Secretary  of  the  late  Union  Cooperative 
which  appeared  since  1892  in  V Almanack,  now  the  Year-book 
of  French  co-operation.  The  Labour  Bureau  (at  first  for 
the  Ministry  of  Commerce,  but  now  for  the  Ministry  of  La- 
bour) used  to  prepare  statistics  from  information  obtained 
from  oflScial  sources.  Since  1907  it  has  published  annual 
statistics  which  are  fairly  complete. 

The  following  tables  show  the  comparative  increase  of  the 
number  of  societies  in  Great  Britain  and  France.  First  of 
all  for  Britain,  the  following  table  shows  the  increase  in  the 
number  of  societies  and  the  number  of  their  members : — 

Number  Number  Number 

of  of  per 

Societies.  Members.  Society. 

1862   331  89,000  269 

1872   930  324,000  848 

1882   1,043  598,000  673 

1892   1,420  1,127,000  794 

1902  1,476  1,893,000  1,215 

1912  1,399  2,750,000  1,970 

1914  1,385  8,054,000  2,205 

1920  1,379  4,504,000  3,260 

It  is  seen  that  since  the  year  1902,  which  marks  the  max- 
imum, the  number  of  societies  has  decreased  by  nearly  100 


56       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

while  the  number  of  co-operators  has  increased  by  nearly 
two-thirds,  and  if  one  goes  back  to  1892,  it  is  seen  that  the 
number  of  societies  has  diminished  by  35,  while  the  number 
of  members  has  increased  nearly  three-fold.  For  France, 
we  give  a  parallel  table,  except  that  we  cannot  go  back  fur- 
ther than  1900,  as  no  trustworthy  statistics  exist  before  that 

date. 

Number  Number  Number 

of                          of  per 

Societies.  Members.  Society. 

1900  939  375,000  400 

1907  2,214  705,000  318 

1914  3,156  876,000  278 

1920  4,000  1,300,000  325 

aL.ilBL^l.l:lL-:i^  -  .     ' 

These  figures  show  that  since  1900  the  number  of  societies 
has  increased  more  than  four-fold  but  that  the  average 
number  of  members  per  society  has  diminished  by  one  fourth, 
wliile  the  number  of  British  societies  in  the  same  period  di- 
minished a  little,  and  the  average  number  of  members  per  soci- 
ety has  nearly  quadrupled.  Nothing  is  more  significant 
than  this  parallel,  which  shows  clearly  the  Anglo-Saxon  ten- 
dency to  concentration  as  opposed  to  the  dispersive  tendency 
of  the  French.  It  shows  that  in  France  the  increase  in  the 
number  of  societies  is  far  more  rapid  than  the  increase  in 
members,  wliich  shows  further  that  the  societies  are  becoming 
smaller  and  smaller.  This  gradual  diminution  in  the  average 
number  of  members  can  partly  be  explained  by  the  fact  that 
according  as  statistical  investigation  spreads  more  small 
societies  are  discovered.  These  figures  are  those  given  in 
the  Bulletin  of  the  Ministry  of  Labour.  The  Year-book 
of  French  Co-operation  of  1914  gives  slightly  higher  figures: 
3,261  societies,  and  881,000  members.  The  average  number 
of  members  in  the  third  column — calculated  by  simply 
dividing  the  total  number  of  members  by  the  number  of 
societies — is  slightly  lower  than  in  reality,  because  a  certain 
number  of  societies  have  not  given  the  number  of  their  mem- 


GEOGRAPHICAL  DISTRIBUTION  67 

bers,  and  therefore  the  divisor  should  be  reduced  by  so  much ; 
but  the  difference  is  insignificant.  Therefore,  with  us, 
multiplication  is  synonymous  with  division!  That  is  why 
(without  mentioning  Paris,  where  there  are  44  societies, 
of  which  only  6  or  7  are  at  all  important),  we  find  54 
societies  in  Lyons,  21  in  Creusot,  11  in  Montceau-les-Mines, 
27  in  Roubaix,  18  in  Tourcoing,  11  in  Bourges,  &c.,  &c. 
More  than  a  quarter  of  the  French  societies  (more  than 
900)  have  less  than  100  members ;  there  are  even  some  which 
have  only  7,  barely  the  legal  minimum ! 

The  French  societies  are  not  only  weak  in  the  number  of 
members,  but  also  in  turnover,*  and  the  amount  of  pur- 
chases per  member.  This  last  is  a  very  serious  symptom  of 
the  lack  of  co-operative  spirit,  for,  as  we  shall  see  further 
on,  it  shows  but  little  enthusiasm  on  the  part  of  the  members. 
Still,  there  is  another  reason  for  it,  which  is  that  the  greater 
number  of  societies  in  France  deal  in  groceries  only,  and 
therefore  the  amount  of  purchases  which  the  members  can 
make  at  their  co-operative  shop  is  very  limited.  More  than 
a  third  of  the  societies  (1,300)  confine  themselves  to  baking, 
and  their  turnover  is  thus  necessarily  restricted.  It  is 
hardly  possible  for  a  co-operative  bakery,  no  matter  how 
enthusiastic  its  members  may  be,  to  sell  more  than  one  4  lb. 
loaf  to  each  member  per  day,  which  hardly  makes  more  than 
£12  per  member  per  annum  at  pre-war  values.  Those 
societies  which  sell  all  classes  of  goods  are  rare.  In  France 
the  average  of  sales  per  head  is  a  little  below  that  of  Ger- 
many, but  it  is  above  all  in  the  average  membership  per  so- 
ciety and  in  the  turnover,  that  we  are  inferior.  If  we  com- 
pare the  figures  of  the  Federation  NationaXe  fran^aise  with 

*  Author's  Note.  The  total  amount  of  sales  (for  the  2,988  societies 
which  furnished  information)  in  1913  was  £12,600,000,  which  represents 
an  average  of  £4,000  per  society,  while  in  Great  Britain  the  average 
was  £64,000,  16  times  more!  Even  in  Switzerland  the  average  is  much 
higher,  namely,  £15,000  sales  per  society.  Recently  a  striking  tend- 
ency towards  amalgamation  has  been  shown  in  Paris  and  the  prin- 
cipal cities  of  France. 


58       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

those  of  the  Hamburg  federation  we  find  for  the  latter  an 
average  of  1,560  members  and  £24,000  turnover,  and  for  the 
former  only  315  members  and  £5,360  turnover.  We  have 
not  huge  societies  like  Germany — only  one  French  society 
(rUnion  des  Cooperatives,  of  Paris)  has  70,000  members, 
a  turnover  of  £3,000,000.  This  society  was  formed  during 
the  war  by  the  amalgamation  of  a  dozen  Parisian  societies. 

Switzerland  takes  a  high  place  among  the  co-operative 
countries,  for  it  has  400  consumers'  societies  with  nearly 
30,000  members,  in  a  population  which  does  not  reach  4 
millions.  This  is  a  proportion  relatively  higher  than  that 
of  Great  Britain  (78  co-operators  per  1,000  inhabitants  in- 
stead of  74)  ;  and  the  turnover,  close  on  six  millions,  is  but 
little  inferior  to  that  of  Britain  (£1.  12s.  per  inhabitant  in- 
stead of  £2),  and  far  above  that  of  Germany  and  most  other 
countries.  Switzerland  has  five  societies  with  over  10,000 
members,  of  which  the  Bale  society  has  37,000  (that  is  to 
say — counting  members  of  families — nearly  the  whole  pop- 
ulation of  the  town),  and  a  turnover  of  £1,080,000.  Still, 
the  Swiss  movement  is  of  recent  date.  It  did  not  really 
start  until  the  formation  of  the  Union  Cooperative  de  Bale 
in  1890,  which  now  has  a  membership  of  more  than  400  so- 
cieties and  a  turnover  of  over  £2,000,000.  One  of  the  fea- 
tures of  Swiss  co-operation  is  the  loyalty  with  which  all  the 
societies  support  the  Union  and  bring  to  it  their  moral  and 
financial  help.  Switzerland,  being  itself  a  federal  democracy 
which  bears  on  its  shield  the  device,  "Each  for  all,  and  all  for 
each,"  is  for  this  reason  particularly  inclined  towards  feder- 
ation in  its  economic  life.     (For  actual  figures,  see  page  49.) 

In  Italy  also  the  co-operative  movement  is  very  remarkable, 
though  for  different  reasons.  Italy  is  of  all  countries  that 
in  which  the  collaboration  of  the  three  great  forms  of  work- 
ing class  association,  namely,  Trade  Unions,  Friendly  Soci- 
eties, and  Co-operative  Consumers'  Societies,  seems  best  real- 
ized.    At  Reggio  Emilia,  notably,  these  bodies  are  grouped 


GEOGRAPHICAL  DISTRIBUTION  69 

in  a  very  strong  union.  There  are  very  few  large  societies 
except  "professional"  societies  like  Cooperative  Operaw,  at 
Trieste  (37,000  members),  or  societies  of  workmen  and 
lower  middle  classes  like  VUnione  Cooperativa  of  Milan 
(17,000  members),  and  the  socialist  society  at  Turin  (19,000 
members) ;  but  the  economic  evolution  of  Italy  is  behind  its 
political  evolution,  and  it  has  not  j'^et  been  able  to  realize  its 
own  unity  in  this  field.  Italy  has  with  great  difficulty  been 
able  to  create  a  general  wholesale  federation,  which  is  not 
making  much  progress.  The  lack  of  statistics  makes  any 
comparison  with  other  countries  impossible. 

Belgium  is  the  only  country  where  the  co-operative  move- 
ment has  taken  a  decidedly  original  form  and  a  socialist  and 
political  colour;  but  for  this  the  reader  is  referred  to  what 
has  been  said  in  the  preceding  chapter. 

There  is  one  small  country  where  co-operation  has  de- 
veloped to  an  extraordinary  degree  more  than  in  any  other 
country,  not  excepting  England,  and  that  is  Denmark.  In 
it  there  are  1,700  consumers*  societies,  a  huge  figure  for  a 
country  with  3  million  inhabitants  that  would  represent  more 
than  20,000  societies  in  France  or  England.  It  is  true 
that  the  societies  are  very  small,  the  total  number  of  members 
being  about  300,000,  or  barely  180  per  society.  Tliat  is  be- 
cause they  are  above  all  rural  societies.  It  is  in  the  coun- 
try districts,  unlike  what  has  happened  in  other  countries, 
that  co-operation  in  all  its  forms  has  developed  most.^ 

At  the  other  extremity  of  the  scale — passing  from  the 
smallest  to  the  greatest  country — we  find  Russia.  There 
the  development  of  co-operation  was  very  slow  until  the  first 
years  of  this  century,  but  during  the  last  ten  years  it  has 
made  great  strides,  and  the  war  has  given  it  an  unexpected 
impetus.     Doubtless   the  Mir  and  the  Artels  had  already 

8  The  greater  emphasis,  however,  is  upon  the  farmers'  marketing 
association  in  Denmark.  This  is  equally  true  of  Ireland.  And  the 
same  conditions  prevail  in  some  of  the  agricultural  states  of  America. 


60       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

shown  the  innate  aptitude  of  the  Russian  people  for  asso- 
ciation. It  is  therefore  not  surprising  that  as  these  anti- 
quated forms  disappear  the  spirit  of  association  should  mani- 
fest itself  in  a  new  form.  The  democratic  movement  here 
finds  an  outlet  while  the  special  progress  due  to  the  war  is  ex- 
plained by  the  necessity  of  struggling  against  the  increase  of 
prices. 

The  number  of  consumers'  societies  in  Russia  is  estimated 
at  about  50,000,  mostly  rural,  and  the  number  of  credit 
societies  (with  which  we  have  no  concern  here)  is  at  least 
15,000.     These  last  are  in  process  of  transforming  Siberia.* 

There  is  nothing  special  to  say  about  other  countries. 
In  Austria-Hungary  there  is  a  fair  number  of  consumers'  so- 
cieties, but  diversity  of  races,  and  the  inequality  of  their 
economic  development,  make  it  impossible  to  form  a  united 
organization.  Austria  properly  so-called  follows,  though 
at  a  considerable  distance,  the  example  of  Germany.  Hun- 
gary, under  the  impulse  of  the  great  society  of  Budapest, 
Hangya  (The  Ant),  has  a  great  number  of  consumers'  soci- 
eties, 1,300,  as  reported  by  a  correspondent  of  the  "Inter- 
national Co-operative  Bulletin."  The  Czechs  in  their  turn 
have  formed  a  Union  at  Prague.  In  Czecho-Slovakia  the 
co-operative  movement  has  made  wonderful  progress  since 
the  country  recovered  its  independence.  In  it  there  are  now 
7,400  societies,  with  600,000  members. 

The  Balkan  countries  have  not  yet  got  beyond  co-operative 
agriculture,  which  is  better  adapted  to  their  economic  condi- 
tion ;  but  they  are  today  considering  consumers'  co-operation, 

*  Author's  Note.  See  the  numerous  articles  published  in  the  "Itusaian 
Co-operator."  The  advance  of  the  Russian  Co-operative  movement 
during  the  war  was  prodigious.  The  Moscow  Society  has  210,000  mem- 
bers, which  far  exceeds  the  membership  of  any  other  existing  society 
in  the  world.  It  is  due  to  this  movement  that  Russia  did  not  die  of 
hunger.  The  Bolshevik  government  respected  the  co-operative  move- 
ment up  to  the  date  that  it  nationalized  it.» 

9  In  1921  The  Soviet  Government  gave  back  to  the  Co-operatives 
the  greater  part  of  their  independence. 


GEOGRAPHICAL  DISTRIBUTION  61 

and  even  Serbia  was  in  process  of  starting  a  school,  almost 
a  university,  for  teaching  co-operation. 

Outside  Europe  there  is  a  great  country  which,  strangely 
enough,  does  not  take  a  high  place  in  this  brief  review,  and 
that  is  the  United  States.  There,  co-operation  has  up  to  the 
present  been  almost  negligible,  as  is  also  the  case  in  other  new 
countries  and  colonies.  The  explanation  for  this  is  that  in 
countries  where  the  workers  are  highly  paid  and  contemptu- 
ous of  small  economics,  and  where  they  generally  lead  a  some- 
what roving  life,  economic  and  social  conditions  are  alto- 
gether unfavourable  to  the  success  of  co-operative  associa- 
tions. On  the  other  hand,  the  struggle  for  life,  which  is  an 
exact  antithesis  of  co-operation,  is  nowhere  so  keen  as  in  the 
United  States. ^^  Nevertheless,  there  are  some  nuclei  of  co- 
operation which  are  gradually  forming,  on  the  one  hand  in 
California,  where  the  majority  of  co-operative  societies  are 
productive  agricultural  societies,  and,  on  the  other  hand,  in 
the  oldest  States,  where  the  conditions  of  life  are  already  be- 
ginning to  resemble  those  of  Europe  as,  for  instance,  Mas- 
sachusetts, New  Jersey,  &c.^^ 

Co-operation  also  may  find  a  favourable  atmosphere  in 
the  chief  centres  of  German,  Italian,  Slav,  and  above  all  Fin- 
nish, immigration,  where  the  immigrants  have  brought  with 
them  and  still  keep  the  customs  of  their  native  land.  Min- 
neapolis, where  there  are  many  Germans  and  Scandinavians, 
is  already  a  co-operative  centre.  It  seems  likely  that  co- 
operation will  tend  to  ispread  among  the  negroes,  but,  that, 
unfortunately,  will  not  increase  its  popularity  in  America. 

In  1916,  the  American  Co-operative  League  was  created  in 
New  York.  This  has  as  its  program  the  grouping  of  all 
co-operative  societies,  as  is  done  by  the  "Unions"  in  other 

10  And  conditions  are  still  further  aggravated  by  the  inevitable 
"chain-store"  which  is  pushing  its  way  into  even  the  smaller  towns. 

11  Since  these  words  were  written  conditions  have  changed  in  the 
United  States,  and  Co-operation  is  flourishing  best  in  the  Central  and 
North  Cffltral   States.    See   Chapter   I. 


62       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

countries.  Lately  the  Rochdale  type  of  co-operation  has 
developed  considerably  in  the  United  States.  Today  (1920) 
there  are  more  than  2,000  societies.^ ^ 

12  Experimental  attempts  have  been  made  with  chain  stores.  To- 
day there  are  none  left.  Wholesale  Co-operatives,  with  chain  stores 
and  with  authority  over  all  the  local  groups  highly  centralized  at 
headquarters,  have  failed  in  Seattle,  Pittsburg,  Hoboken,  and  Chicago. 
In  1922  the  Pacific  Co-operative  League  followed  these  others  and 
asked  for  a  receivership.  Today  the  two  or  three  wholesales  in  exist- 
ence are  run  on  the  Rochdale  plan,  granting  local  autonomy  to  the 
independent  store  society  (except  in  the  case  of  those. few  members  of 
the  Central  States  Wholesale  Society  which  have  not  yet  asked  for 
local  independence).  The  strength  of  the  American  movement  is  in 
the   independent   societies   at   present. 


CHAPTER      VI 
VARIOUS      SYSTEMS     OF      SALE 

(1)  Sale  at  Current  Price 

The  general  rule  followed  in  all  the  distributive  societies  in 
the  sale  *  of  their  goods  is  to  sell  them  at  the  same  retail 
prices  as  those  current  in  the  neighbourhood.  The  rule  of 
selling  at  the  current  trade  price  does  not  seem  to  be  con- 
sistent with  our  ideas  of  distributive  co-operation,  as  a  sav- 
ing in  expenditure  is  the  first  object  of  this  type  of  co-opera- 
tion, and  it  would  seem  to  be  more  natural  to  go  straight  for 
the  goal  by  selling  at  the  lowest  possible  price,  that  is,  at  cost 
price.  In  fact,  there  are  some  societies  which,  faithless  to 
the  Rochdale  rule,  operate  in  this  manner. 

It  is  noteworthy  that  these  societies  are  recruited  from  the 
two  extremes  of  the  social  ladder : — 

(«)  From  the  middle  classes,  Government  officials,  and  em- 
ployees who,  having  sufficiently  high  salaries,  but  being 
obliged  to  live  up  to  a  recognized  standard,  ask  no  more  of 
co-operation  than  a  means  of  best  satisfying  their  needs  at 
the  least  possible  expense,  and  do  not  trouble  at  all  about 

*  Author's  Note.  The  word  "sale"  is  not  absolutely  accurate  in  this 
connection,  as  it  is  a  question  of  an  association  which  sells  to  its  own 
members,  or,  rather,  of  an  association  of  people  who  sell  to  themselves. 
The  word  "division"  or  "distribution''  would  really  be  more  correct. 
Thus  the  English  call  these  associations  distributive  societies,  and  in 
Prance  the  employes  are  often  called  "repartiteurs"  (distributors). 
We  shall  see  further  on  that  the  law  and  the  Treasury  do  not  generally 
regard  the  consumers'  society  as  being  in  the  same  category  as  a  trader 
who  buys  to  re-sell.  However,  the  word  "sale"  is  sanctioned  by  cus- 
tom, and  it  is  legally  accurate,  as  the  society  as  a  whole  is  an  entity 
distinct  from  its  members. 

63 


64.       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

realizing  any  social  transformation.  To  this  class  belong 
generally  such  stores  as  the  Civil  Service  Stores  and  the  Army 
and  Navy  Stores,  which  are  among  the  largest  shops  in  Lon- 
don. But  as  we  shall  see  later,  these  are  looked  upon  by 
English  co-operators  as  being  really  outside  the  ranks  of 
co-operation.^ 

(b)  From  among  the  very  poor  and  needy  whose  wages  are 
insufficient  to  supply  the  minimum  of  nourishment.  In  these 
cases  it  would  be  impossible  as  well  as  inhuman  not  to  procure 
for  them  the  largest  amount  of  food  supphes  in  return  for 
the  means  at  their  disposal,  as  they  should  get  the  maximum 
value  for  every  halfpenny.  In  Russia,  for  example,  where 
wages  generally  are  very  low,  the  distributive  societies  sell  at 
the  lowest  possible  price.^ 

But  this  system  of  selling  at  net  cost  has  very  serious  dis- 
advantages : — 

1.  It  exasperates  the  traders  of  the  neighbourhood  by  a 
price-cutting  competition,  which  they  are  unable  to  sustain. 
And  this  is  unnecessary,  because  if  a  reduction  in  expendi- 
ture were  the  only  object  of  co-operation  it  would  be  much 
simply  for  people  not  to  trouble  to  form  a  society  of  con- 
sumers but  merely  to  make  an  arrangement  with  the  various 

1  The  Staff  of  the  Co-operative  Reference  Library,  Dublin,  is 
authority  for  the  statement  that  the  Army  and  Navy  Stores  can  no 
longer  he  regarded  as  co-operative  in  any  way,  since  it  pays  a  divi- 
dend of  several  hundred  per  cent,  on  its  share  capital.  The  United 
States  have  several  false  co-operatives,  masquerading  as  genuine  en- 
terprises and  collecting  millions  of  dollars  from  individuals  who  be- 
lieve  they   are   contributing  to   Rochdale   societies. 

2  This  is  often  attempted  in  the  United  States.  It  is  known 
as  the  "cost-plus"  system  of  sale.  It  is  the  method  adopted  in  several 
of  the  societies  in  the  mining  towns  of  the  central  part  of  the  country. 
But  as  a  matter  of  fact,  there  is  little  to  be  gained  from  such  an  at- 
tempt. In  this  country  there  is  such  keen  competition  among  grocers 
that  the  selling  price  is  usually  forced  down  to  a  level  very  close  to 
"cost-plus."  Many  of  the  societies  are  barely  covering  expenses  as 
it  is,  and  some  are  running  behind.  For  this  very  reason,  many  co- 
operators  are  becoming  convinced  that  the  grocery  store  is  not  tlie 
best  beginning  for  a  co-operative   society. 


\ 


VARIOUS  SYSTEMS  OF  SALE  65 

traders  in  the  locality,  whereby  they  could  get  a  discount  on 
all  current  prices.  This  would  mean  that  the  larger  the 
number  of  buyers  so  much  the  greater  advantage  for  the 
traders.  This  very  simple  system  has  often  been  tried  and 
has  been  warmly  recommended,  particularly  by  those  who 
wish  to  secure  the  benefits  of  co-operation  for  the  public 
without  interfering  with  iretail  trade.^  (See  later,  "The 
Conflict  between  Co-operative  Societies  and  Traders.") 

2.  It  prevents  the  society  from  selling  to  outsiders,  be- 
cause, on  the  one  hand,  it  would  be  absurd  to  confer  on 
strangers  the  same  benefits  as  on  the  members,  namely,  sup- 
phes  of  goods  at  cost  price ;  and,  on  the  other  hand,  it  is  im- 
practicable to  have  two  different  prices  for  each  article.  It 
is  true  that  selling  to  the  public  is  not  practised  by  all  co- 
operative societies,  and  is  even  generally  discouraged,  as  we 
shall  see.  But,  even  though  the  society  sells  only  to  its  mem- 
bers, the  system  of  selling  at  cost  price  has  another  draw- 
back, namely,  it  tempts  certain  members  to  buy  goods  for 
their  friends  and  neighbours,  and  even  perhaps  to  make  a 
profit  thereby  as  middlemen.  This  abuse  has  been  fairly  fre- 
quent, especially  in  the  co-operative  societies  in  Spain. 

3.  Above  all,  it  prevents  the  society  from  attaining  any 
of  the  objects  which  we  shall  examine  later:  individual  or  col- 
lective saving,  insurance,  production,  education  or  propa- 
ganda work,  or  even  the  building  up  of  capital,  because  this 
last  can  only  be  done  by  surplus  profits  being  left  in  the  so- 
ciety as  deposits.  (See  p.  108,  chapter  "Capital.")  We  may 
say  that  all  these  objects  are  sacrificed;  in  fact,  the  whole 
co-operative  program  is  sacrificed  for  the  sale  at  low  prices. 
The  societies  that  work  on  this  system  cut  their  corn  while 

3  There  are  many  societies  in  the  United  States  which  follow  this 
practice,  but  it  is  generally  condemned.  The  co-operative  store  which 
takes  orders  for  other  commodities  to  be  supplied  by  private  mer- 
chants, or  which  rents  out  part  of  its  floor  space  to  the  trader  is  con- 
fusing the  public  whereas  it  should  be  doing  everything  possible  to 
make  clear  the  distinction  between  private  and  co-operative  business. 


66       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

green,  and  they  do  not  differ  much  from  the  philanthropic 
societies  of  the  pre-Rochdale  period.  Another  strong  ob- 
jection raised  against  this  system  of  selling  at  cost  price  is 
that  it  tends  to  the  lowering  of  wages.  This  was  the  great- 
est argument  put  forward  by  socialists  against  co-operation, 
when,  during  the  second  half  of  the  19th  century,  they 
hindered  the  co-operative  movement.  They  laid  down  the 
law  that  any  permanent  lowering  of  price  in  articles  for 
consumption  must  bring  with  it  a  proportionate  lowering 
of  wages.  This  is  what  was  called  the  "brazen  law."  To- 
day this  argument  does  not  hold  good,  as  this  law  is  no 
longer  believed  in.  And  even  if  it  were  true,  it  would  have 
the  same  unfortunate  consequences  in  the  matter  of  sales 
with  dividend  as  in  that  of  sales  at  cost  price. 

This  is  why  in  every  country  nearly  all  co-operative  socie- 
ties follow  the  Rochdale  rule  and  sell,  not  at  cost,  but  at 
current  price.  The  profit  thus  realized  on  each  purchase  is 
credited  to  the  purchasing  member,  and  is  returned  to  him 
at  the  end  of  the  year,  or  generally  at  the  end  of  every  six 
months. 

By  adopting  this  method  societies  give  up  the  idea  of  of- 
fering their  members  the  advantage  of  a  daily  saving  in  their 
purchases,  in  order  to  be  able  to  return  to  them  a  good 
round  sum  once  or  twice  a  year,  a  sort  of  dividend.  This 
amounts  to  the  same  thing,  no  doubt,  but  the  effect  on  the 
consumer  is  much  greater.  As  a  matter  of  fact,  this  system 
is  extraordinarily  appreciated  by  workmen,  and  still  more 
by  their  wives.  One  might  almost  say  that  it  is  too  much 
appreciated,  because,  of  the  millions  of  co-operators  existing 
in  the  world,  the  large  majority  only  become  such  owing  to 
this  system  of  dividends.  Wherever  we  find  workmen  well 
enough  paid  to  be  able  to  spend  freely,  well  enough  educated 
in  co-operation  to  look  for  big  results  from  it,  far-seeing 
enough  to  prefer  the  future  advantage  of  an  addition  to 
their  revenue  for  themselves,  or  an  additional  support  to 


VARIOUS  SYSTEMS  OF  SALE  67 

their  society,  to  a  daily  saving  of  a  few  pence,  there  the 
Rochdale  rule  of  sale  at  current  price  can  be  unhesitatingly 
applied. 

It  is  worthy  of  note  that  in  both  England  and  Belgium  a 
good  number  of  societies  raise  the  prices  of  their  goods 
higher  than  the  current  market  price  in  order  to  augment 
their  dividends.  Some  societies  are  able  by  this  means  to 
declare  a  dividend  of  20  per  cent.,  or  even  25  per  cent.  (4)8. 
or  5s.  in  the  £).  Many  co-operators,  so  far  from  objecting 
to  this  plan  (which  consists  of  taking  an  extra  halfpenny 
out  of  their  pockets  in  order  to  restore  the  same  halfpenny 
six  months  later),  rather  take  a  pride  in  it,  and  press  for 
its  adoption  in  their  general  meetings.  The  fact  is,  as  we 
shall  see  further  on,  they  find  in  this  plan  a  means  of  com- 
pulsory thrift.  On  the  subject  of  Belgian  societies,  M. 
Varlez  writes  in  a  report  on  Social  Economy  in  Belgium 
for  the  Paris  Exhibition  of  1900,  as  follows :  "The  fantastic 
system  of  paying  30  centimes  for  an  article  (bread)  which 
every  one  knows  to  be  only  worth  20,  has  become  so  ingrained 
a  habit  that  the  working  classes  in  certain  towns  do  not 
wish  to  give  it  up.  On  various  occasions  it  has  been  pro- 
posed to  the  members  of  co-operative  societies  to  lower  the 
price  of  bread.  They  declined  positively  as  they  find  this 
mode  of  saving  both  easy  and  efficacious."  However,  this 
system  of  raising  prices  has  some  serious  disadvantages, 
which  we  shall  indicate  later,  notably  that  of  shutting  the 
door  of  co-operation  in  the  face  of  the  poorest  class.  On 
the  other  hand,  we  must  recognize  that  this  exaggeration  of 
the  Rochdale  principle  implies  a  strong  enthusiasm  for  co- 
operation. I  see  in  it  a  robust  faith  in  the  power  of  co- 
operation. In  countries  where  such  a  faith  scarcely  exists, 
as  in  France,  a  co-operative  society  which  attempted  to  sell 
above  the  current  price  would  hardly  find  a  supporter,  no 
matter  what  bonus  were  returned.  Societies  which  practise 
a  mixed  system  of  selling  at  a  price  slightly  lower  than  the 


68       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

current  price  in  order  to  attract  customers  but  nevertheless 
sufficient  to  allow  a  certain  margin  of  profit,  which  can  be 
employed  in  one  or  other  of  the  ways  which  we  shall  indicate 
later,  are  much  more  numerous,  particularly  in  France.^ 
The  essential  thing  is  to  make  co-operators  understand 
that  they  must  choose,  and  that  they  cannot  have  the  ad- 
vantages both  of  low  prices  and  of  large  dividends.  If  they 
wish  to  extend  their  movement  to  the  poor  they  must  give 
up  their  big  dividends  and  sell  at  cheap  rates,  always  leaving, 
however,  a  small  margin  for  profit,  say  5  per  cent. 

The  complaint  has  been  made  in  England  that  consumers' 
co-operation  is  only  intended  for  the  well-to-do  working 
classes,  and  remains  inaccessible  for  the  more  needy,*  and 
the  Women's  Co-operative  Guild  (of  which  more  hereafter) 
is  trying  to  lead  the  co-operative  movement  in  the  direction 
of  lower  prices.  But  this  is  not  easy,  because  mere  lowness 
of  price  is  not  sufficient  to  attract  a  poor  clientele;  it  is 
also  imperative  to  stock  goods  of  an  inferior  quality,  because, 
unfortunately,  these  are  the  only  goods  which  the  casual  and 
unskilled  workers  can  aflTord  to  buy  with  their  resources. 
And  co-operative  societies  hold  it  as  a  point  of  honour  to 
keep  only  goods  of  the  first  quality. 

(2)  Sales  for  Cash 

The  second  rule  for  sales  is  sale  for  cash.  For  this  there 
are  both  economic  and  moral  reasons:  First,  economic 
reasons,  because  every  establishment  which  gives  credit  must 

4  This  is  the  plan  generally  prevalent  in  the  United  States  also.  We 
know  of  no  instances  where  goods  are  sold  above  the  current  price, 
except  as  the  clever  manager  is  able  to  raise  the  price  on  isolated  com- 
modities so  as  to  increase  the  surplus-savings. 

*  Author's  Note.  An  Englishman  has  said,  "The  truth  is  that  co- 
operation only  saves  those  who  are  already  converted."  This  may 
be,  but  there  is  now  no  longer  the  necessity  of  making  co-operation 
a  mere  work  of  salvation.  It  is  rather  a  work  of  mutual  aid.  For 
social  institutions,  as  well  as  for  individuals,  there  is  a  law  of  division 
of  labour,  which  must  be  respected. 


VARIOUS  SYSTEMS  OF  SALE  69 

raise  its  prices,  or  risks  failure.  In  fact,  on  the  one  hand, 
it  is  certain  to  lose  some  of  its  credit,  and,  on  the  other,  be- 
ing obliged  by  selling  on  credit  to  buy  on  credit  from  the 
wholesalers,  it  must  buy  under  less  advantageous  conditions. 
It  must  have  a  larger  capital,  as  it  is  unable  to  turn  it  over 
rapidly.  A  co-operative  society  ought  not  to  put  itself  into 
such  an  inferior  position.  Secondly,  moral  reasons,  because 
it  is  immoral  to  make  the  good  customers,  i.  e.,  the  scrupulous 
members,  support  the  insolvency  of  those  who  do  not  pay 
their  debts,  under  the  guise  of  raised  prices.  Besides,  the 
habit  of  buying  on  credit  constitutes  a  veritable  servitude 
for  any  workman's  family  which  gets  caught  in  its  meshes. 
The  word  servitude  is  not  exaggerated,  for  if  a  man  is  in 
debt  to  his  grocer  or  his  baker  he  cannot  complain  of  the 
prices,  the  weights,  or  the  quality  of  the  goods  supplied,  nor 
can  he  go  and  deal  elsewhere ;  he  must  perforce  accept  every- 
thing for  fear  of  his  account  being  closed.  And  if  he  sees 
no  chance  of  freeing  himself  from  the  debt  he  gives  up  hope, 
breaks  up  his  home,  and  leaves  the  locality  secretly. 

Even  for  the  well-to-do  purchasers  who  always  pay  up 
in  the  end  buying  on  the  credit  system  is  a  detestable  habit, 
for  nothing  encourages  useless  expenditure  like  the  oppor- 
tunity of  being  able  to  buy  without  money.  Traders  are 
well  aware  of  this,  and  therefore  are  in  favour  of  the  credit 
system.  True,  they  themselves  are  often  the  victims  of  the 
habits  they  have  encouraged  in  their  customers.  We  have 
often  seen  milliners,  dressmakers,  restaurant  keepers,  obliged 
to  close  down  their  businesses,  unable  to  meet  their  obliga- 
tions, even  with  very  rich  clients  on  their  books.  Large 
fancy  goods  warehouses  make  a  rule  of  cash  sales  only,  but 
small  shops  can  only  hold  their  customers  by  offering  them 
the  bribe  of  credit.  It  is  therefore  not  only  in  its  own 
interest,  but  in  that  of  the  labouring  population  also,  that 
the  co-operative  society  should  make  a  rule  of  sale  on  a 
ready  cash  basis,  both   as   a  means   of  education  and  of 


70       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

emancipating  the  poor  man  from  this  wretched  form  of  de- 
pendence. 

Gladstone,  the  illustrious  statesman,  viewed  this  as  the 
greatest  virtue  of  the  consumers'  society.  Nevertheless,  it 
is  necessary  to  say  that  this  rule  is  not  always  observed  and 
that  a  large  number  of  societies,  even  in  England,  sell  on 
credit,  and  this  number  is  increasing.^  However,  the  total 
sums  due  only  represent  1.5  per  cent,  of  the  gross  sales,  so 
there  is  no  great  cause  for  alarm.  Undoubtedly  the  tempta- 
tion is  great.  On  the  one  hand,  a  feeling  of  humanity  makes 
it  difficult  for  the  society  to  refuse  brea^  to  its  necessitous 
member,  and,  on  the  other  hand,  there  is  always  the  hope  of 
fighting  the  traders  by  attracting  their  clients  through  the 
same  advantages.  But  it  is  a  bad  method  of  vanquishing 
an  adversary  to  imitate  or  borrow  his  bad  qualities ;  such 
tactics  may  be  commercial,  they  are  certainly  not  co-opera- 
tive. The  worst  evil  is  when  a  co-operative  society  uses  the 
sale  on  credit  as  a  means  of  enticing  away  the  members  of  a 
society  which  sells  only  for  cash.     This  is  self-evident. 

If  the  working  population  of  a  locality  is  really  reduced  to 
living  from  day  to  day,  and  has  not  the  ready  money  to  make 
its  purchases,  if  it  is  obliged  to  wait  for  its  fortnight's  wage 
to  be  able  to  pay  for  its  food,  it  would  be  better  to  form  near 
the  distributive  society  a  loan  society,  either  philanthropic, 
or  preferably  a  mutual  aid  society,  which  could  make  ad- 
vances to  the  necessitous  workman.  These  loans  could  be 
made  by  taking  the  member's  share  pass-book  as  a  guarantee, 
or  by  accepting  the  security  of  one  or  two  of  his  friends,  or 
even  by  making  the  loan  a  debt  of  honour,  where  the  mem- 

5  This  is  equally  true  of  the  American  societies.  Many  of  the  socie- 
ties have  even  been  known  to  give  credit  in  unlimited  amount  to  non- 
members  and  to  share  the  surplus  with  them  as  well!  In  bad  times, 
these  societies  which  give  credit  to  many  of  their  members  and  at  the 
same  time  are  burdened  with  the  expense  of  a  delivery  system  are  ex- 
ceedingly hard  put  to  it  to  compete  successfully  with  the  cash-and- 
carry  chain  stores. 


VARIOUS  SYSTEMS  OF  SALE  71 

ber  is  worthy  of  confidence.  Some  societies  have  tried  these 
systems. 

When  a  society  starts  on  the  perilous  path  of  selling  on 
credit  it  is  absolutely  essential  to  impose  certain  rules.  It 
may  limit  the  credit  to  a  certain  sum,  generally  to  the  amount 
of  the  shares  held  by  the  member,  which  will  serve  as  a  guar- 
antee. Or  it  may  only  give  credit  for  goods  of  a  durable 
nature,  such  as  furniture.  In  this  case,  selling  on  credit,  or 
at  least  payment  by  instalments,  may  be  justifiable,  the 
ultimate  expenditure  being  greater.  We  know  that  one  large 
business  house  in  France  has  made  a  specialty  of  selling  fur- 
niture on  the  instalment  system,  and  the  abuses  of  the  system 
are  not  as  great  as  we  are  told.  They  have  even  rendered 
a  national  service  by  enabling  young  people  to  marry  and 
set  up  a  home  without  having  to  wait  until  they  have  saved 
enough  money  to  buy  furniture.  As  regards  bread,  rather 
than  sell  it  on  credit  it  would  be  better  to  give  it  gratuitously, 
on  the  member's  fulfiling  certain  conditions  as  specified  in  the 
rules — when  work  is  interrupted  and  when  unforscen  misfor- 
tunes occur,  &c.  This  is  what  the  Belgian  societies  do; 
they  give  quantities  of  bread,  proportionate  in  their  value  to 
the  purchases  previously  made  by  the  member. 

We  see  that  in  Belgium  the  society  not  only  refuses  credit 
to  its  members,  but  that,  on  the  contrary,  it  is  the  members 
themselves  who  give  credit,  by  buying  counters  in  advance, 
whereby  they  can  obtain  bread  for  a  week  or  a  fortnight. 
An  excellent  way  of  compelling  the  workmen  to  be  provident ! 

(3)  SeUing  to  the  PiAlic 

The  third  question  which  arises  a  propos  of  sale  is  that  of 
deciding  whether  a  society  should  sell  to  its  members  only,  or 
to  the  general  public.  There  is  no  doubt  that  selling  to  the 
public  is  outside  the  sphere  of  co-operation.  One  might 
even  say  that  it  is  outside  its  very  definition,  because  when  a 
society  sells  to  the  public  it  can  no  longer  say  that  its  object 


72  CONSUMERS'  CO-OPERATIVE  SOCIETIES 
is  "to  provide  for  the  needs  of  its  members."  Thus,  Ger- 
man law,  considering  that  sale  to  non-members  is  incompat- 
ible with  the  essential  character  of  co-operation,  has  pro- 
hibited it  under  severe  penalties.-  (Laws  of  1st  May,  1889, 
and  12th  August,  1896.)  This  regulation  must  be  posted 
up  in  the  societies'  shops. 

The  Rochdale  Pioneers  sold  to  the  public,  but  in  order 
to  avoid  the  reproach,  which  they  themselves  levelled  at  the 
private  trader,  namely,  that  of  exploiting  the  public  by 
making  profit  out  of  them,  they  adopted  the  method  of  giv- 
ing the  non-members  who  dealt  with  their  society  a  bonus 
or  dividend  at  half  the  rate  of  that  returned  to  members, 
placing  the  surplus  in  the  reserve  fund.  This  rule  is  not 
absolute  everywhere.  Some  societies  give  the  non-member 
buyers  a  dividend  at  quarter  rate  only.  Others,  on  the 
contrary,  allow  them  a  three-quarter  rate.  There  are  even 
some  (at  least  that  of  Darwen)  which  give  to  non-member 
purchasers  the  same  dividend  as  that  given  to  members — an 
entirely  unwarrantable  generosity,  as  we  have  said  above." 
Perhaps  it  may  be  said :  Why  do  you  not  give  the  public  the 
full  amount  of  the  dividend  on  their  purchases,  or  at  least 
a  sum  equal  to  that  of  the  members,  thereby  abolishing  all 
exploitation.''  But  if  this  were  done,  the  public — enjoying 
the  same  advantages  as  the  members  without  having  their 
responsibilities  (shares,  administration,  &c.) — would  have 
no  inducement  to  j  oin  the  society,  and  thus  the  aim  of  co- 
operation, which  is  to  attract  as  many  members  as  possible, 
would  be  manifestly  diverted. 

This  ingenious  Rochdale  rule  of  sale  to  the  non-member 
with  limited  participation  in  the  dividends  has  been  adopted 
by  the  majority  of  English  consumers'  societies.  On  the 
Continent  there  is  more  diversity.  Sale  to  the  public  is 
generally  practiced  in  Russia,  Spain,  Switzerland,  Belgium, 

« In  the  United  States  one-'half  or  one-third  of  the  full  savings-return 
is  often  given  to  non-members.    In  some  instances  the  full  return  is 


VARIOUS  SYSTEMS  OF  SALE  73 

Holland,  Italy,  and  in  France,  since  in  the  last-named  coun- 
try the  co-operative*&ocicties  have  been  put  on  the  same  foot- 
ing as  the  traders  in  the  matter  of  the  imposition  of  taxes. 
{See  Chapter  xiv.)  It  should  be  said,  however,  that  in 
Switzerland  societies  are  gradually  giving  up  selling  to  the 
public.  In  Italy,  the  heads  of  the  co-operative  movement 
are  trying,  on  the  contrary,  to  encourage  it.  In  France 
up  to  the  Act  of  1905  co-operative  societies  were  treated 
differently  in  the  matter  of  taxation,  according  as  to 
whether  they  did  or  did  not  sell  to  the  public,  only  the 
former  societies  having  to  pay  for  their  trade  license,  the 
latter  being  exempt.  But,  as  we  shall  see  later  on,  they 
are  all  now  treated  similarly — at  least,  those  which  have 
retail  stores. 

Both  in  France  and  in  Switzerland  this  question  of  sale 
to  the  public  has  been  the  subject  of  endless  discussions. 
In  France  the  two  opinions  are  equally  balanced.  The  Co- 
operative Congress  at  Limoges  in  1907  allowed  sale  to 
the  general  public,  but  more  as  a  matter  of  toleration,  and 
under  the  condition  that  the  surplus  arising  from  sales 
to  the  public  should  not  be  distributed  among  the  members, 
but  be  employed  for  propaganda,  for  education,  or  for  any 
other  work  of  general  interest.  The  system  of  sale  to  the 
public  is  most  generally  preferred:  First,  because  it  is  be- 
lieved that  selling  to  the  non-member  is  the  most  efficacious 
means  of  propaganda  on  behalf  of  co-operation;  secondly, 

given.  In  many  societies  the  return  to  non-members  must  remain 
with  the  society  and  is  applied  toward  payment  for  capital  stock. 
We  met  one  woman  recently  who  serves  us  here  as  a  fair  example  of 
the  kind  of  person  with  whom  Co-operation  has  to  deal  in  most  Ameri- 
can cities  and  towns.  Although  she  had  never  been  a  member  of  the 
local  co-operative,  she  had  come  around  regularly  each  year  to  collect 
her  savings-return  on  purchases.  This  last  year  the  return  fell  from 
4%  to  2%,  and  she  not  only  refused  to  trade  at  the  store  any  longer 
but  used  her  experience  as  a  talking  point  to  prove  that  co-operation 
is  worthless.  Shie  is  now  trading  regularly  at  a  private  store,  receiving 
no  return  whatever,  and  appears  to  be  well  satisfied. 


74       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

because  according  as  it  increases  the  takings  of  the  society 
so  it  enables  the  society  to  reduce  its  working  expenses,  to 
increase  the  rapidity  of  its  turnover,  and,  finally  to  enlarge 
its  spheres  of  operation.  If  it  is  the  ambition  of  co-opera- 
tion to  take  the  place  of  ordinary  traders  it  will  have  to 
enter  the  list  by  carrying  war  into  the  enemy's  camp. 

But  it  must  be  admitted  that  those  co-operaters  who  are 
hostile  to  the  system  of  sale  to  the  public  are  not  without 
excellent  arguments.  In  the  first  place  they  hold  it  as  a 
point  of  honour  not  to  be  mistaken  for  traders,  and  for 
that  reason  wish  to  avoid  doing  as  the  latter  do.  And  they 
believe  that  the  habit  of  selling  to  the  public  would  have 
the  result  of  developing  the  mercantile  spirit  in  co-operators, 
and  the  love  of  money,  to  which  they  are  already  too  much 
inclined.  Many  co-operators  even  fear  that  selling  to  the 
public  kills  the  co-operative  spirit  completely  and  transforms 
the  co-operators  into  traders. 

These  apprehensions  would,  doubtless,  be  justified  if  co- 
operators  were  in  the  habit  of  benefiting  themselves  by  the 
profits  accruing  through  sales  to  non-members.  This  re- 
proach cannot  be  laid  to  their  charge  if  they  are  faithful 
to  the  Rochdale  rule,  and  give  back  to  non-members  a  part 
of  the  dividends  due  to  them  and  place  the  surplus  in  the 
society's  reserve  fund  for  the  development  of  the  society.* 
We  must  not  forget,  however,  that  the  reserve  fund  belongs 
to  the  members  and  must  return  to  them  in  the  event  of  the 
dissolution  of  the  society,  and  that,  consequently,  every- 
thing that  is  put  into  the  reserve  fund  is  to  their  indirect 
benefit."^    Even  such  advantages  as  works  of  solidarity,  bene- 

*  Author's  Note.  This  system,  however,  entails  a  somewhat  com- 
plicated system  of  book-keeping,  because  two  separate  accounts  have 
to  be  kept,  one  for  members  and  one  for  non-members  and  an  account 
must  be  opened   for  each  purchase,  even  though  it  be  a  solitary  one. 

7  The  members  of  the  Co-operative  Cafeteria  of  New  York  City 
voted  unanimously  to  accept  from  their  association  only  such  savings- 
returns  as  were  due  them  on  actual  sales  to  members.  Considerably 
more  than  half  of  the  business  of  this  society  is  with  non-members. 


VARIOUS  SYSTEMS  OF  SALE  75 

fit  clubs,  education,  recreation,  &c.,  profit  the  members  in 
the  long  run.  To  do  away  with  all  appearance  of  exploita- 
tion of  the  public  it  would  be  better  to  apply  the  profits 
accruing  to  the  society  from  sales  to  non-members — or  at 
least  the  part  which  is  not  returned  to  them — towards  seme 
work  of  public  utility  outside  the  society.  But  then,  there 
should  be  a  mutual  arrangement  for  this,  because  if  each  so- 
ciety were  to  support  some  different  public  institution,  such 
scattered  expenditure  would  not  have  any  appreciable  re- 
sults. 

To  sum  up,  selling  to  the  public  should  be  allowed  only  as 
a  means  of  attracting  members  and  making  the  society 
known  to  the  public,  and  not  as  a  permanent  practice. 
Every  purchaser  should  be,  if  not  actually  a  member,  at 
least  a  candidate  for  membership.  In  every  place  where 
this  principle  is  understood  and  applied  the  sale  to  non- 
members  is  a  negligible  quantity — 4s  per  cent,  to  5  per  cent, 
of  the  total  sales  in  England,  7  per  cent,  to  8  per  cent,  in 
France.*  In  fact,  these  purchases  very  soon  pass  from  the 
category  of  non-members  to  that  of  members.  This  is 
even  compulsory,  for,  instead  of  paying  a  part  of  the  divi- 
dend to  non-members  (with  which  they  would  probably  be 
content  and  not  trouble  about  becoming  members),  this 
part  of  their  bonus  is  retained  in  the  society  and  registered 
to  their  credit,  so  that  they  automatically  become  members. 

Unfortunately,  there  are  societies  which,  so  far  from  wish- 
ing to  convert  the  non-member  purchaser  into  a  member,  ask 
nothing  better  than  to  leave  him  outside  the  participation  of 
dividends,  so  that  the  latter  may  become  larger.      Such  is  the 

*  Author's  Note.  We  say  8  per  cent,  on  the  total  turnover  or  sales, 
that  comprises  all  the  societies,  even  those  who  do  not  sell  to  non- 
members;  but  if  we  only  take  into  consideration  those  which  do,  then 
the  proportion  of  sales  to  the  public  is  much  higher.  According  to  the 
investigation  made  by  the  Ministry  of  Labour,  the  proportion  of  socie- 
ties selling  to  the  public  is  38  per  cent.,  and  the  proportion  of  sales  to 
the  public  in  these  societies  is  21  per  cent. 


76      CONSUMERS'  CO-OPERATIVE  SOCIETIES 

case  in  a  certain  number  of  societies  in  France,  and  still 
more  so  in  Spain.  This  explains  a  fact  which  at  first  sight 
seems  disconcerting.  We  see,  for  example,  in  the  Vosges 
district,  a  society  of  seven  members  which  did  a  retail  trade 
of  £1,964  in  1913.  Is  it  possible  that  each  member's  trade 
is  £280,  that  is,  about  20  times  the  average  of  French  co- 
operators.?  Certainly  not,  but  95  per  cent,  of  these  sales 
are  made  to  strangers.  They  may  not  even  come  to  the 
shop,  but  buy  second-hand  from  the  members.  Such  are 
societies  of  workmen-traders.  At  Bordeaux,  the  co-opera- 
tive societies  reckon  that  nearly  one-third  of  their  sales  are 
to  the  general  public.  At  Barcelona,  in  Spain,  there  are 
societies  where  one  sees  workmen-members  receiving  from 
£12  to  £14  a  year  in  dividends  arising  from  the  sales  made 
to  their  non-member  comrades,  whom  they  induce  to  come 
to  their  shop  as  customers.  It  is  somewhat  the  same  system 
as  that  of  workmen  who  sub-let  a  room  or  a  bed  to  com- 
rades poorer  than  themselves,  and  make  a  profit  at  their 
expense. 

It  may  also  be  said  that  the  conversion  of  a  non-member 
into  a  member  is  hindered,  not  by  the  spirit  of  avarice  on  the 
part  of  the  society,  but  by  the  indifference  of  the  purchaser. 
In  order  to  combat  this  grievous  inertia  of  the  public,  a  good 
number  of  French  societies  have  created  a  category  inter- 
mediate between  non-members  and  members,  that  of  "adher- 
ents." These  are  reckoned  as  members  in  all  the  statistics, 
although  they  are  not  legally  so,  not  having  paid  for  or 
even  subscribed  for  shares.  There  is  only  a  minimum  en- 
trance fee  demanded  of  them,  generally  one  of  Is.  6d.  They 
cannot  participate  in  the  management  of  the  society,  and 
have  no  place  at  the  meetings;  nevertheless,  they  generally 
receive  the  same  percentage  of  bonus  as  the  members.  This 
is  a  method  of  attracting  those  workmen  to  the  society  who 
are  not  enthusiastic,  or  who  have  not  means  enough  to  sub- 
scribe for   a   share.     This   system    (which   establishes    two 


VARIOUS  SYSTEMS  OF  SALE  77 

classes  of  members,  superior  and  inferior),  cannot  be  recom- 
mended, because  it  is  anti-democratic  and  anti-co-operative. 
There  are  even  some  societies  where  the  "adherent"  cannot 
become  a  member  as  the  number  of  shares  is  limited,  as,  for 
example,  that  of  the  Civil  Employees  of  the  Seine. 


CHAPTER      VII 
THE      DIVISION      OF      PROFITS 

Since  in  accordance  with  the  rules  laid  down  in  the  pre- 
ceding chapter,  the  co-operative  society  selling  at  current 
prices  ought  to  make  profits,  it  remains  to  be  seen  what  is  the 
best  way  of  using  these  profits.  This  is  one  of  the  funda- 
mental questions  of  co-operation.  We  have  already  said 
that  the  master  stroke  of  genius  of  the  Rochdale  Pioneers 
was  the  discovery  of  exactly  that  method  of  using  profits 
which  has  been  the  chief  cause  of  the  success  of  consumers' 
co-operation,  namely,  the  division  of  profits  among  all  the 
members  in  proportion  to  the  amount  of  their  individual 
(purchases.* 

We  must  recognize  that  it  is  the  application  of  this  rule 
which  has  ensured  the  successful  development  of  consumers' 
societies,  since  it  gives  to  each  member  a  reward  proportion- 
ate to  his  co-operative  zeal,  to  his  loyalty  to  his  shop.  Be- 
sides, it  is  founded  on  one  of  the  most  certain  of  economic 
laws,  the  law  that  the  success  of  a  business  enterprise  de- 
pends less  on  its  capital  than  on  its  customers.  It  is  there- 
fore just  that  the  profits  should  belong  to  those  who  by 
their  acts  ensure  the  prosperity  of  the  society. 

But  it  must  be  admitted  that  the  Rochdale  co-operators, 

*  Author's  Note.  The  principle  of  sale  at  current  price,  and  con- 
sequently of  a  profit  to  be  gained,  was  promulgated  before  the  time  of 
the  Pioneers  at  a  co-operative  congress  held  during  Owen's  lifetime, 
in  1833.  But  the  profits  thus  to  be  realized  by  the  society  ought  to 
be  retained  by  it  and  dedicated  exclusively  to  the  development  of  the 
society  itself.  The  original  idea  was  to  give  the  profits  back  to  the 
members    (    See   Industrial   Co-operation,   by    Miss   Catherine   Webb.) 

78 


THE  DIVISION  OF  PROFITS  79 

although  disciples  of  Owen,  showed  themselves  to  be  thor- 
ough individualists  and  made  an  appeal  to  personal  inter- 
ests the  great  motive  force  of  their  movement.  Still,  this 
rule  is  none  the  less  a  new  and  wholly  revolutionary  principle 
in  our  economic  organization,  because  it  is  no  small  thing, 
either  in  fact  or  in  theory,  to  lay  down  a  proposition  that 
capital  has  never  any  right  to  profits.  It  is  so  much  the 
more  severe,  because  capital  is  deprived  thereby  of  truly 
enormous  profits.  (See  Chapter  ix.)  It  is  notliing  less 
than  the  destruction  of  capital,  or  at  least  its  reduction  to 
the  position  of  a  mere  factor  in  production;  it  amounts,  in 
fact,  to  a  decision  that  all  of  the  profit  which  capital  has 
regarded  as  its  legitimate  share  should  be  restored  to  those 
from  whom  it  was  taken,  and  that  share  capital  should  be 
reduced  to  the  position  of  debenture  stock,  with  a  rate  of 
interest  fixed  at  the  minimum  at  which  its  services  can  be 
hired ;  that  is  to  say,  that  it  shall  be  treated  exactly  as  capi- 
tal itself  has  treated  labour. 

It  goes  even  further  than  this ;  it  is  not  merely  taking 
profit  from  one  person  and  giving  it  to  others.  The  transfer 
of  profits  from  the  capitalist  to  the  consumer  is  actually  the 
abolition  of  profits,  because  to  say  that  profits  shall  be  re- 
turned to  those  from  whom  they  were  taken  is  obviously 
abolishing  tliem.  This  is  clearly  expressed  by  the  French 
term  which  is  used  to  designate  these  so-called  profits.  They 
are  never  called  by  that  name,  but  are  called  bonuses,  repay- 
ments, or,  better  still,  overcharges  (trop  per^us).  In  Eng- 
land they  used  to  be  called  dividends,  but  are  today  called 
surpluses.^ 

It  is  a  way  of  saying  to  the  consuming  member:  "We  have 
charged  a  little  too  much,  that  is  to  say,  more  than  the  fair 

1  In  the  United  States  the  word  surplus-saving  is  taking  the  place 
of  "profit"  and  savings-return  is  coming  into  use  in  place  of  the 
word  "dividend."  The  word  "dividend"  is  still  widely  used  in  Eng- 
land as  in  the  United  States  and  "divi-hunting"  is  the  curse  of  many 
societies  in  both  countries. 


80      CONSUMERS'  CO-OPERATIVE  SOCIETIES 

price,  for  various  reasons,  either  to  help  you  to  save,  or  to 
give  you  a  pleasant  surprise,  but  the  surplus  we  have  taken 
we  now  return  to  you ;  here  it  is !" 

The  elimination  of  profits  means  the  establishment  of  a 
state  of  society  where  everything  is  sold  at  cost  price,  that 
is  to  say,  at  the  price  which  exactly  represents  the  sum  of 
wealth  and  labour  which  it  has  absorbed ;  that  would  be  noth- 
ing less  than  to  realize  the  dream  of  all  the  socialists  since 
Owen,  the  initiator  of  co-operation.  It  may  also  be  said, 
without  paradox,  that  it  would  be  the  realization  of  the  ideal 
of  all  the  economists  of  the  liberal  school,  for,  did  not  these 
aim  at  a  perfect  state  of  free  competition  which  could  have 
no  other  result  than  to  reduce  the  rate  of  profits  to  zero? 
In  fact,  all  competition  tends  to  bring  the  selling  price  closer 
to  the  cost  price  and  consequently  to  reduce  profits.  The 
manufacturers  know  their  business !  This  law  cannot  act 
in  the  present  economic  conditions,  because  a  thousand  obsta- 
cles under  the  forai  of  legal  or  actual  monopolies  obstruct 
it,  but  if  unddr  an  imaginary  regime  of  absolutely  free  com- 
petition all  these  obstacles  were  removed,  the  sale  price  and 
the  cost  price  would  be  identical.  So  that,  paradoxical  as 
such  an  assertion  appears,  it  may  be  said  that  if  co-opera- 
tion were  universal  the  end  which  is  vainly  imagined  under 
free  competition  would  be  attained.* 

In  order  to  calculate  the  amount  returned  to  each  member, 
it  is  necessary,  first  of  all,  to  know  exactly  the  amount  of 
his  purchases.     For  this  purpose,  either  a  special  account  is 

*  Author's  Note.  See  the  chapter  Cooperation  ou  Compdlition  in 
our  book  Cooperation.  M.  Walras  declares  emphatically  that,  under  a 
regime  of  open  competition  the  margin  of  profit  is  zero.  There  is, 
however,  this  diflFerence  between  socialists  and  economists,  as  far  as 
the  abolition  of  profits  is  concerned,  that  the  former  include  interest 
in  this  abolition,  whereas  economists  see  in  interest  a  necessary  ele- 
ment in  the  cost  of  production,  which  should  survive  the  abolition  of 
profit.  As  for  co-operators,  they  hesitate  between  these  two  theories, 
but  the  majority  are  generally  in  agreement  with  the  economists.  (See 
later.  Chapter  ix.) 


THE  DIVISION  OF  PROFITS  81 

opened  for  each  member,  or  all  his  purchases  are  entered  in 
a  pass  book,  which  he  has  to  bring  each  time  he  goes  to  the 
shop  and  to  return  at  the  time  when  the  accounts  are  closed, 
or  else  each  purchaser  is  given  a  docket  on  which  the  total 
price  has  been  printed.  We  need  not  discuss  the  technical 
advantages  of  these  diiferent  methods. 

Once  the  total  purchases  are  known  the  bonus  remains  to 
be  calculated.  Generally,  the  proportion  between  the  gross 
total  of  sales  and  the  net  profits  realized  is  taken,  and  this 
proportion  is  paid  on  the  purchases  of  each  member.  Thus, 
if  a  society  sold  a  million  pounds'  worth  of  goods  and  made 
£150,000  net  profit,  or  15  per  cent.,  the  member  who  has 
bought  £100  worth  of  goods,  has  a  right  to  £15  bonus.  But 
the  profits  vary  considerably  according  to  the  different  arti- 
cles sold.  There  are,  for  example,  some  goods,  such  as 
sugar,  upon  which  little  or  no  profit  is  made ;  others,  such  as 
meat,  upon  which  there  is  often  a  loss;  and  others,  such  as 
preserves,  upon  which  the  profit  is  high.  As  a  result,  the 
member  who  only  bought  the  goods  which  were  sold  without 
profit  or  at  a  loss  would  be  very  much  benefited  by  such  a 
division  of  dividend. 

To  avoid  this  difficulty  some  societies  make  a  rule  of  fixing 
the  sale  price  of  each  article  at,  for  example,  20  per  cent, 
above  the  cost  price  in  order  to  make  the  same  profit  on  each 
article.  In  these  circumstances  the  prices,  being  fixed  auto- 
matically, are  sometimes  much  above  and  sometimes  much 
below  the  current  local  prices,  and  as  a  rule  unscrupulous 
members  yield  to  the  temptation  of  buying  from  the  co-oper- 
ative store  only  those  articles  which  are  sold  below  current 
prices,  leaving  on  its  hands  those  which  are  sold  above  mar- 
ket rates,  because  they  can  buy  these  cheaper  at  the  ordinary 
shop. 

Is  there  any  need  for  thus  seeking  to  equalize  the  advan- 
tages which  members  derive  from  the  division  of  the  bonus.'' 
We  think  not.     The  apparent  injustice  is,  on  the  contrary, 


82       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

a  striking  application  of  the  law  of  solidarity  which  ought 
to  govern  the  societies.  In  fact,  it  is  generally  on  articles  of 
luxury  that  the  profits  are  highest,  whilst  they  are  lowest  on 
articles  of  prime  necessity.  Thus  the  poor  members  benefit 
from  the  purchases  of  the  rich,  and  this  is  as  it  should  be. 

In  what  form  are  the  bonuses  distributed  amongst  the 
members.'*  In  money,  according  to  the  Rochdale  rule,  which 
is  generally  followed.  The  Belgian  societies  have  put  into 
practice  another  system,  which  is  that  of  paying  the  bonus  in 
the  form  of  dockets  which  may  be  exchanged  for  goods  at 
the  co-operative  shop.  The  advantage  of  this  system  is 
that  the  member  cannot  go  outside  the  society  to  its  rivals 
or  to  the  public-house  to  spend  the  money  made  by  the  soci- 
ety; by  this  means  the  turnover  of  the  society  is  increased 
each  year. 

Nevertheless  this  system  is  not  to  be  recommended,  neither 
from  the  economic  point  of  view,  because  it  forces  the  mem- 
ber to  increase  his  consumption,  since  he  cannot  use  his 
bonus  except  by  increasing  his  expenses,  nor  from  the  moral 
point  of  view,  because  it  re-introduces  for  the  benefit  of  the 
co-operative  societies  those  very  acts,  such  as  the  practice  of 
shopkeepers  who  give  their  clients  "discount  stamps,"  which 
are  convertible  into  goods  in  their  own  shops,  which  have 
been  so  strongly  blamed  in  private  businesses.  It  compels 
the  workman  to  spend  all  his  wages  in  the  social  shop,  and 
does  not  give  him  the  satisfaction  of  being  able  to  spend  a 
single  coin  freely.  Money  implies  the  liberty  of  spending; 
it  can  no  doubt  be  misused,  but  like  all  liberty  its  use  can  be 
learned  only  by  practice  and  not  by  a  kind  of  tutelage.  A 
German  law  of  1896  prohibits  co-operative  shops,  as  well  as 
econoTiiats  and  traders,  from  issuing  tickets  or  counters 
payable  in  goods. 

The  half-yearly  dividend  makes  a  very  appreciable  in- 
crease of  revenue  for  a  working-class  family,  and  is  greatly 


THE  DIVISION  OF  PROFITS  83 

welcomed  by  the  house-keeper.  I  know  very  well  that  those 
who  disparage  co-operation,  and  who  mock  at  its  ambitions, 
say,  "What  does  it  give?  Taking  what  it  can  give,  even 
where  co-operation  has  had  its  greatest  success — in  England 
— the  £13  millions  of  bonuses  (with  deduction  made  for 
interest,  as  it  should  be)  divided  among  three  million  co-oper- 
ators, is  equal  to  £4.  7s.  6d.  per  family.  That  will  not 
change  the  condition  of  the  working  classes.  A  rise  of  pay 
gained  by  a  good  trade  union  organization  or  by  collective 
bargaining  could  give  as  much." 

But  this  £4.  7s.  6d.  is  only  an  average.  It  is  not  surpris- 
ing that  the  average  should  be  small  if  one  considers:  (1) 
That  among  the  consumers'  societies  there  are  many  which  do 
not  set  themselves  out  to  increase  their  members'  incomes, 
but  simply  aim  at  selling  at  a  low  price,  or  have  one  of  the 
various  other  aims  wliich  we  shall  consider  later;  (2)  That 
among  the  three  million  co-operators  there  are  many  who  are 
only  co-operators  in  name,  and,  since  they  never  go  to  the 
shop,  obtain  no  bonus.  It  is  the  nature  and  honour  of  free 
social  institutions  that  they  can  be  useful  only  to  those  who 
wish  and  know  how  to  use  them,  and  they  cannot  be  asked  to 
give  their  services  to  those  who  do  not  want  them.  But,  if 
instead  of  taking  the  general  average,  we  find  how  much 
increase  in  income  certain  members  in  certain  societies  can 
gain,  we  shall  find  results  which  are  far  from  negligible. 

Thus,  according  to  an  enquiry  made  a  few  years  ago  in 
Britain,  we  find  in  the  Perth  Society  one  member  receiving 
£264  in  26  years,  which  is  equal  to  £10  a  year,  another  in 
the  same  society  receiving  £208,  also  in  26  years,  which  is 
equal  to  £8  a  year.  In  the  Manchester  and  Salford  Society 
a  member  received  £360  in  eighteen  years,  which  is  £20  a 
year.  Probably  this  member  was  a  highly-paid  clerk,  not  an 
artisan,  but  that  does  not  affect  the  question.  A  recent 
number  of  the  Co-operative  News  cites  the  case  of  a  mem- 


84       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

ber  of  the  Newmains  (Lanark)  Society,  who  in  26  years 
received  £944.  We  in  France  are  a  long  way  behind  these 
figures. 

The  figures  for  France  are  not  known,  as  the  societies  do 
not  state  their  bonuses,  but  it  must  be  admitted  that  in  France 
— for  reasons  which  we  shall  give  later — the  bonuses  distrib- 
uted are  very  much  lower;  they  hardly  ever  amount  to  £4, 
and  are  often  less.  Still  they  are  benefits  to  small  house- 
holds, as  is  proved  by  the  discontent  expressed  by  the  mem- 
bers if  in  any  year  there  should  be  no  bonus.  M.  3arriol,  a 
statistician,  has  published  some  particularly  illuminating 
calculations.  They  deal  with  the  supplying  of  a  family  of 
co-operators  with  provisions  before  the  war.  This  family 
belonged  to  a  Parisian  co-operative  society;  their  total  ex- 
penditure was  £96.  At  the  prices  marked  in  Potin's  cata- 
logue the  total  cost  of  the  articles  in  this  domestic  budget 
would  have  reached  £108.  Therefore,  the  saving  effected  by 
this  family  amounted  to  £12.  If  we  add  to  this  the  5  per 
cent,  dividend  distributed  by  this  co-operative  society, 
namely,  £4.  16s.  (and,  if  so  desired,  the  3  per  cent,  collected 
for  the  social  work  of  the  society,  i.  e.,  £2,  17s.  7d.),  we  see 
that  there  has  been  a  saving  to  the  amount  of  £19.  13s.  7d. 
realized  by  this  co-operative  household.  The  difference 
would  be  still  greater  if  instead  of  making  the  comparison 
with  the  prices  of  the  large  Parisian  grocery  store  we  took 
those  of  the  grocers  in  the  working-class  quarters.  Of 
course,  it  is  evident  that  in  this  case  we  are  dealing  with  a 
very  well-paid  workman's  household,  as  is  proved  by  the 
figure  of  £96  in  purchases,  which  must  mean  an  income  of  at 
least  £200  in  pre-war  values. 

The  amount  of  extra  money  divided  among  the  members 
depends  upon  somewhat  complex  conditions : 

(1)  It  obviously  depends  upon  the  good  management  of 
the  society.  It  is  very  evident  that  if  the  society  is  badly 
managed  it  will  suffer  the  fate  of  all  badly-managed  busi- 


THE  DIVISION  OF  PROFITS  85 

nesses,  it  will  not  make  any  profits,  and  consequently  will  have 
nothing  to  distribute.  When  a  society  pays  no  dividend  or 
a  small  dividend  it  may  be  on  principle,  as  we  shall  see  later ; 
but  it  may  be,  and  more  often  is,  simply  owing  to  incapacity, 
bad  management,  bad  accountancy,  dishonest  employes,  un- 
due increase  of  running  expenses,  and  lack  of  experience  in 
buying,  supplemented  by  the  absence  of  a  wholesale  society, 
&c.  (See  the  chapter  on  the  causes  of  success  and  failure 
of  societies.) 

(2)  The  rate  of  dividend  also  depends  upon  the  loyalty  of 
the  member  in  using  his  co-operative  shop.  The  loyalty  of 
co-oporators,  above  all  that  of  their  wives,  who,  in  fact,  have 
entire  charge  of  the  purchases  of  the  household,  varies 
greatly.  Even  in  the  most  active  societies  there  is  a  large 
number  of  members  who  only  deal  at  rare  intervals,  either 
because  of  their  distance  from  the  shop,  or  from  apathy,  or, 
from  the  commonest  of  all  motives,  because  their  wives  prefer 
to  buy  things  from  the  "grocer  round  the  comer."  * 

•  Author's  Note.  According  to  calculations  made  by  Cernesson  as 
regards  all  the  Parisian  societies  {Revue  des  Deux-Mondes,  15th  Oc- 
tober, 1908),  the  average  purchases  per  member  amounted  to  £10.  14s. 
4d.  We  went  through  these  calculations,  taking  the  four  most  impor- 
tant societies  from  those  belonging  to  the  Federation  and  of  socialist 
tendency,  and,  as  we  foresaw,  we  obtained  a  remarkably  higher  result — 
£23.  7s.  2d.  (in  1913).  Nevertheless,  this  figure  is  still  much  less  than 
it  ought  to  be,  because  it  hardly  represents  a  quarter  of  the  wages 
of  a  workman's  family  in  Paris,  and  the  societies  in  Paris  offer  the 
most  varied  assortment  of  goods.  If  the  members  really  did  their 
duty  loyally  as  members,  they  could  double  or  treble  the  amount  of 
their  purchases.  In  the  "professional"  co-operative  societies  of 
workers — societies  formed  of  clerks,  &c. — the  average  purchase  per 
member  is  considerable,  because  their  incomes  are  larger,  and  also 
because  they  are  more  regular  in  their  purchases. 

The  following  table  shows  the  average  purchases  per  member  in 
various  countries  before  the  war: — 

£ 

England    29 

Finland    25 

Denmark   24 

Switzerland    20 

Germany    15 

France   14 


s. 

d. 

4 

0 

4 

0 

0 

0 

17 

0 

7 

0 

12 

0 

86       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

There  are  societies  which  seek  to  make  loyalty  compulsory, 
by  excluding  an}^  member  who  has  not  purchased  during  the 
year,  or  the  half  year,  goods  to  a  certain  minimum  value. 
But  this  rule,  although  it  is  statutory,  is  very  seldom  applied, 
because  it  would  have  the  effect  of  excluding  too  many  mem- 
bers in  each  year.^  The  loyalty  of  members  is  a  matter  of 
education,  not  of  coercion.  To  become  a  member  of  the 
Central  Council  of  the  new  French  Federation  one  must  be 
able  to  guarantee  having  made  the  required  minimum  amount 
of  purchases  at  one's  own  society,  that  is,  if  there  is  a  statu- 
tory minimum.  The  Siberian  co-operative  societies  have  a 
different  form  of  compulsion.  Any  member  who  docs  not 
reach  the  required  minimum  of  purchases  is  liable  to  a  fine  of 
£1.  In  fact,  the  average  purchases  per  member  has,  as  was 
natural,  risen  since  1914  to  £41  in  Britain,  and  £20  in 
France,  &c.,  but  if  the  depreciation  of  money  is  taken  into 
account  it  may  be  said  that  the  average  purchases,  meas- 
ured in  quantities  rather  than  values,  has  fallen. 

(3)  Ftirther,  success  is  dependent  in  part  upon  the  capac- 
ity of  the  shop  to  supply  all  the  needs  of  its  members.  If  it 
only  supplies  bread  or  groceries  it  is  obvious  that  the  total 
consumption  of  the  member — however  zealous  he  may  be, 
though  he  buys  up  to  the  maximum  of  his  possible  consump- 

As  these  figures  are  obtained  by  dividing  the  amount  of  sales  by 
the  number  of  members  (see  Table,  page  49)  it  follows  that  in  the 
countries  where  the  societies  sell  to  the  public  the  average  purchases 
per  member  is  increased  by  the  sum  sold  to  the  public,  as  the  two 
sums  cannot  be  distinguished.  These  averages,  then,  are  not  strictly 
comparable.  Thus,  Germany — where  sale  to  non-members  is  prohibited 
— would  find  herself  handicapped,  if  she  had  not  the  advantage  that 
only  her  most  important  societies  were  chosen  as  examples,  those  in 
the  Table,  page  54. 

2  This  is  the  reason  why  such  a  rule  is  not  in  practice  oftener  in 
the  United  States.  But  there  are  societies  which  do  have  this  rule 
embodied  in  their  by-laws.  It  is  not  entirely  that  they  wish  to  make 
loyalty  compulsory  (although  that  element  enters  in,  of  course);  but 
they  see  no  reason  why  any  one  should  be  able  to  invest  money  in  a 
co-operative  society  and  receive  interest  on  it  when  they  themselves 
have  done  nothing  to  contribute  to  the  success  of  the  business.  Such 
is  a  modified  form  of  profiteering. 


THE  DIVISION  OF  PROFITS  87 

tion — and  therefore  his  total  bonus,  will  be  very  limited. 
If,  on  the  other  hand,  the  co-operative  shop  sells  all  possible 
articles,  it  is  clear  that  the  member,  having  no  temptation  to 
go  elsewhere,  can  spend  in  it  nearly  his  whole  income,  and, 
in  consequence  of  this,  gain  the  benefit  of  extra  income  from 
all  the  branches  of  his  family  budget. 

It  is  partly  for  this  reason  that  in  Britain  the  average  of 
purchases  per  member  is  far  higher  than  that  of  any  other 
country,  while  we  know  that  in  France  nearly  one-half  of  the 
societies  only  sell  bread  while  the  other  half  only  sell  groceries. 

(4)  The  absence  of  competition  is  another  factor.  If  there 
is  no  shop  other  than  the  co-operative  society  in  the  local- 
ity— as  is  sometimes  the  case  where  co-operative  societies  are 
attached  to  large  works  or  mines — it  is  very  clear  that  the 
worker  will  buy  there  everything  he  needs.  Thus,  in  the 
Society  of  Anzin  (a  great  French  colliery)  the  average  of 
members'  purchases  is  more  than  double  the  general  aver- 
age, being  about  £32,  bringing  back  £6  in  bonuses,  or  the 
equivalent  of  a  month's  pay. 

(5)  It  also  depends  partly  on  the  prices  at  which  goods 
are  sold,  for  it  is  obvious  that,  other  things  being  equal,  the 
rate  of  the  bonus  to  be  distributed  will  depend  upon  sale 
prices.  The  question  of  the  price  at  which  goods  should  be 
sold  has  been  raised  in  all  the  Co-operative  Congresses. 

The  lowest  price,  that  is  to  say,  the  cost  price,  is  charged 
at  the  two  extremities  of  the  scale :  First,  in  those  societies 
whose  members,  coming  from  the  very  poorest  classes,  have 
first  to  think  of  eating  before  they  can  think  of  saving  or  bo- 
nuses, and,  secondly,  in  the  societies  of  professional  men  who 
have  to  be  economical,  but  who  do  not  bother  about  small  bo- 
nuses. 

High  prices,  that  is  to  say,  prices  above  prices  current 
in  outside  establishments,  are  favoured  in  districts  which  are 
strongly  co-operative,  and  which  can  equally  well  be  social- 
ist or  bourgeois.     The  difference  between  the  two  types  of 


88       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

society  lies  in  the  object  of  employment  of  the  profit  obtained 
by  increasing  prices.  The  object  of  the  bourgeois  societies 
is  to  give  each  member  the  maximum  individual  return,  and 
they  pride  themselves  in  distributing  20  per  cent.,  or,  even 
like  some  British  societies,  25  per  cent,  in  bonuses.  In  the  so- 
cialist societies,  such  as  the  Belgian  co-operative  societies, 
the  object  is  to  provide  money  for  works  of  social  solidarity, 
and  even  to  contribute  financial  support  to  their  political 
party  without  disdaining,  as  one  may  well  believe,  individual 
sharing.  Still,  there  is  today  a  tendency  to  re-act  against 
high  prices,  and  to  be  satisfied  with  moderate  dividends. 
High  prices  make  co-operation  inaccessible  to  the  poorest 
classes,  and  often  have  the  effect  of  creating  unfortunate 
rivalries  between  co-operative  societies  in  the  same  town, 
since  each  one  tries  to  attract  members  to  itself  through 
their  appetites  for  a  larger  dividend,  and  finally  pervert  the 
co-operative  spirit  by  bringing  in  the  spirit  of  gain,  and  thus 
work  altogether  against  co-operative  education. 

In  England,  the  question  of  what  is  understood  by  "a 
good  dividend,"  and  by  what  standard  it  should  be  measured, 
is  often  debated.  It  must  be  answered  that  a  good  dividend 
is  one  which  is  obtained  solely  by  good  management,  and 
on  the  contrary,  that  a  dividend,  however  high  it  may  be,  is 
bad  if  it  is  only  obtained  by  one  of  the  four  following  means 
— raising  the  prices  above  current  prices,  lowering  wages 
below  the  trades  union  level,  elimination  of  contributions  to 
works  of  general  utilit}',  or  the  abolition  or  great  reduction 
of  the  part  which  ought  to  be  set  aside  for  reserve  and 
depreciations.*  In  Britain  the  average  of  dividends  is  13.6 
per  cent.,  but  according  to  general  opinion  this  is  too  high. 
In  Switzerland  the  average  is  only  7  per  cent.     In  France 

3  The  two  first-named  of  these  evil  practices  by  which  high  surpluses 
are  realized  are  little  known  to  American  co-operation.  The  two 
last-named  evils  are  all  too  common.  But  in  any  event,  returns  seldom 
exceed  7  or  8  per  cent,  here;, and  more  often  they  are  as  low  as  from 
2  to  5  per  cent. 


THE  DIVISION  OF  PROFITS  89 

it  generally  does  not  reach  5  per  cent.  There  is,  however, 
a  society  at  St.  Remy  sur  Avre,  in  Normandy,  which  dis- 
tributes 15  per  cent.,  but  it  is  composed  almost  exclusively 
of  farmers. 

What  should  the  member  do  with  this  addition  to  his  in* 
come.''  It  is  possible  that  he  spends  it,  and  in  this  case  he 
draws  from  it  no  advantage  other  than  a  gratuitous  increase 
in  his  consumption — one  can  name  societies  in  Paris  where 
the  bonus,  as  soon  as  received,  has  been  used  for  a  little 
"spree," — but  if  it  be  a  fairly  round  sum — some  bank  notes, 
or  at  least  a  few  pieces  of  gold — and  if  the  co-operative  spirit 
is  sufficiently  developed,  it  is  likely  that  this  sum  will  not  be 
spent  in  the  public-house,  but  will  be  used  for  some  extraor- 
dinary expense,  such  as  the  purchase  of  furniture — this  is 
the  commonest  form  among  English  co-operators,  who  are 
proud  of  their  homes — the  payment  of  some  old  debt,  the  pay- 
ment of  the  doctor's  bill  in  case  of  sickness,  the  marriage 
of  children,  &c.  "Extraordinary  expenses"  come  into  every 
life,  however  simple,  just  as  into  public  finance,  and  in  order 
to  meet  these  a  budget  of  extraordinary  receipts  should 
be  kept,  as  well  as  one  for  ordinary  expenses.  Since  the 
workman  generally  does  not  have  any  extraordinary  re- 
ceipts, his  only  resource  is  to  run  into  debt.  Co-operation 
brings  him  this  extraordinary  income  in  the  form  of  the  bonus. 
When  visiting  the  enormous  warehouses  of  the  Co-operative 
Wholesale  Society  in  Manchester  we  were  surprised  to  see 
relatively  elegant  and  expensive  furniture  on  sale,  such  as 
wardrobes  with  mirrors,  cabinet  dressing-tables,  baths  with 
gas  heaters,  and  even  pianos.  Being  astonished  that  such 
furniture  could  be  within  the  reach  of  the  income  of  a  work- 
ing-man, we  were  told  that  these  things  were  bought  at  the 
time  of  the  distribution  of  dividends.  Of  course,  they  are 
often  bought  by  principal  employes  and  other  well-paid  co- 
operators. 

If  he  has  the  good  fortune  not  to  have  to  meet  any  extraor- 


90       CONSUMERS*  CO-OPERATIVE  SOCIETIES 

dinary  expenses  he  can  add  tliis  extra  monc}^  to  his  savings ; 
he  finds  it  a  ready  means  of  saving,  and  tliis,  therefore,  is  an 
important  object  of  co-operation,  and  one  which  economists 
praise  above  all;  and  for  a  long  time  in  France,  as  in  Eng- 
land, they  have  recommended  that  no  other  aim  should  be 
sought.  This  is  what  prudent  co-operators  in  Britain  do. 
Among  those  we  mentioned  (page  83)  the  one  who  received 
£264  left  £88  in  the  society,  and  he  who  had  received  £360 
left  £60  in  the  society.  The  capital  which  is  left  in  the 
society  in  the  form  of  loans  or  share  subscriptions  is  esti- 
mated to  be  about  one-third  of  the  annual  profits.  The 
gross  total  of  these  accumulated  savings  is  now  nearly 
£80,000,000. 

It  should  be  remarked  that  this  saving  has  the  wonderful 
property  that  it  has  not  been  made  at  the  cost  of  priva- 
tion. It  is  the  only  means  of  saving  of  which  this  can  be 
said.  Economists  consider  saving  under  the  word  absti- 
nence, and,  in  fact,  it  seems  a  contradiction  in  terms  to  say 
one  can  save  without  depriving  oneseK  of  anything.  Such 
is,  however,  the  squaring  of  the  circle  which  co-operation  has 
achieved,  in  the  neatest  possible  manner,  by  that  solution 
which  is  called  "saving  by  spending."  It  should  be  noted 
that  this  saving  is  not  only  easy,  but  that  it  becomes  compul- 
sory and  even  automatic  each  time  the  bonus,  instead  of 
being  paid  in  cash  to  the  member,  is  retained  and  credited 
to  his  account  until  a  certain  sum  is  reached.  That  is  the 
rule  followed  in  nearly  every  co-operative  society  where  the 
members  have  paid  only  one-tenth  of  the  value  of  their 
shares  on  entering,  or  where  they  have  merely  paid  an 
entrance  fee.  Their  share  of  the  bonus  is  retained  from  half- 
year  to  half-year  until  it  has  reached  a  sum  equal  to  the 
value  of  the  share  subscribed  for,  or  to  be  subscribed  for. 
This  method  of  enforced  thrift  is  most  successful  in  the 
Schulze-Delitzsch  co-operative  credit  societies  and  the  Eng- 
lish and  American  co-operative  building  societies,  because 


THE  DIVISION  OF  PROFITS  91 

the  value  of  the  shares  is  usually  fixed  rather  high  (£20  to 
£40)  precisely  with  this  intention.  Once  a  member  has  got 
into  the  habit  of  seeing  his  bonus  kept  in  the  common  fund 
he  very  easily  forms  the  habit  of  leaving  it  there  of  his 
own  free  will,  even  after  his  shares  are  fully  paid  up  and  the 
retention  of  the  bonus  is  no  longer  compulsory.*  In  this 
way  the  consumers*  society  acts  as  a  savings  bank. 

One  of  the  methods  of  saving  which  is  most  appreciated 
by  co-operators  is  that  of  acquiring  a  house  by  annual  pay- 
ment.    We  shall  discuss  this  later  on. 

There  is  another  form  of  saving  which  is  particularly 
needed  by  workers,  that  is  insurance  against  sickness,  old 
age,  and  unemployment ;  I  do  not  say  insurance  against  ac- 
cidents, because  in  most  countries  the  employer  is  liable  for 
compensation  in  such  cases.  The  worker  who  wishes  to 
guard  against  these  risks  has  to  join  either  a  mutual  aid 
society  or  a  trade  union,  if  not  both  at  the  same  time,  and  to 
pay  to  each  subscriptions  which  form  a  fairly  heavy  tax  on 
the  income  of  the  worker.  Well!  the  bonus  gained  from  the 
consumers'  society  will  provide  money  enough  to  meet  such 
misfortunes,  for,  by  a  happy  compensation,  while  other  forms 
of  association  cost  money,  this  one  brings  it  in.  M.  Cheys- 
son  has  calculated  that  the  premium  to  be  paid  for  insurance 
against  the  five  risks  to  which  working-class  families  are  ex- 
posed— sickness,  incapacity,  old  age,  unemployment,  prema- 
ture death — did  not  exceed  £2  in  all,  but  this  sum  of  £2  can 
easily  be  obtained  by  afl51iation  to  a  consumers'  society,  even 
in  France;  it  only  represents  a  bonus  of  5  per  cent,  on  a 
total  purchase  of  £40.  M.  Cheysson  set  himself  to  advocate 
this  means  of  employing  bonuses,  as  he  saw  in  it  the  saving 

4  The  best  societies  in  the  United  States  encourage  this  practice  on 
the  part  of  the  members.  Many  a  society  has  found  that  it  could  in- 
crease its  amount  of  share  capital  per  member  in  no  other  way.  Such 
re-investment  of  savings-returns  often  goes  either  toward  the  purchase 
of  shares  for  other  individuals  in  the  member's  family  or  into  the  loan 
capital  fund. 


92       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

of  mutual  benefit  societies.  We  do  not  object  to  this,  pro- 
vided that  it  is  left  to  the  co-operator  himself  to  use  his 
bonus  in  this  way ;  but  if  it  is  the  co-operative  society  which, 
owing  to  lack  of  confidence  in  the  spirit  of  foresight  among 
its  members,  wishes  to  pay  the  bonuses  to  mutual  aid  so- 
cieties directly,  then  we  should  have  serious  objections  to 
the  system,  because  in  that  case  co-operative  societies  would 
only  be  cows  to  be  milked  by  mutual  aid  societies !  It  is  the 
duty  of  co-operation  to  keep  its  resources  for  its  own  ends 
and  not  to  serve  as  the  instrument  of  other  organizations. 

It  is  also  curious  to  note  that  on  this  point  economists  of 
the  "saving"  school  meet  socialists,  who  also  condemn  the 
division  of  bonuses  among  individuals,  in  theory  at  least,  and 
wish  to  consecrate  them  to  social  ends.  (See  the  last  chap- 
ter, "Co-operation  and  Socialism.") 

When  a  society  divides  the  whole  of  its  profits,  except  that 
portion  which  is  by  law  devoted  to  a  reserve,  among  its  mem- 
bers, one  may  think  that  it  pays  too  much  attention  to  the 
interests  of  the  individual  and  is  not  unlike  a  purely  capital- 
ist society.  One  expects  that  a  co-operative  society  should 
give  some  attention  to  a  loftier  and  more  social  purpose. 
The  Rochdale  Pioneers  understood  this  well,  as  is  testified  by 
their  excellent  act  in  devoting  by  their  rules  2^  per  cent,  of 
their  bonus  to  education.  If  all  the  English  societies  had 
conformed  to  this  rule  it  would  have  formed  a  fund  for  popu- 
lar instruction  which  would  be  far  from  negligible,  because, 
on  a  total  of  £13,200,000  of  profits,  this  tax  would  have 
realized  more  than  £320,000  a  year.  It  is  true  that  when 
the  Pioneers  established  their  budget  for  educational  pur- 
poses, public  education  did  not  exist  in  England ;  it  was  only 
given  in  private  establishments,  principally  religious. 
Nowadays,  funds  for  education  are  less  urgent,  as  it  is 
provided  by  the  State.  But  the  idea  of  the  Pioneers  was 
not  merely  that  of  general  education,  but  one  of  co-operative 
instruction  also:  they  wished  to  mould  new  generations  of 


THE  DIVISION  OF  PROFITS  93 

oo-operators.      Now  this  necessity  is  more  urgent  than  ever, 
in  England  and  elsewhere. 

In  reality,  no  English  society,  as  far  as  we  know,  has  had 
the  courage  to  put  into  force  the  Pioneers'  rate,  not  even 
the  Society  called  the  Rochdale  Pioneers!  The  total  sum 
devoted  to  education  by  British  co-operators  does  not  reach 
£120,000  or  less  than  1  per  cent.  In  all  their  Congresses, 
and  in  their  papers,  British  co-operators  complain  of  the 
small  proportion  of  their  funds  which  societies  devote  to  ed- 
ucation, which  proportion,  instead  of  growing,  is  diminish- 
ing.^ One  of  them  has  said  that  the  dividend  among  the 
members  ought  not  to  exceed  6  or  7  per  cent.,  and  that  all 
the  rest  (that  is,  about  an  equal  part,  as  the  average  rate  of 
dividend  is  13.5  per  cent.)  ought  to  go  to  the  education 
fund.«  Out  of  nearly  £80,000  profits  in  1912  they  only  set 
aside  £800  (i.  e.,  1  per  1,000)  and  £240  for  various  under- 
takings, and  distributed  all  the  balance  among  the  members, 
which  was  a  proportion  of  from  16  to  17  per  cent,  on  their 
purchases.  Leeds  is  one  of  the  societies  which  contributes 
most  largely  to  education  (more  than  £2,000).  Of  course, 
it  is  the  largest  society  of  all;  but  perhaps  it  is  because  it 
spends  so  much  on  education  that  it  has  become  so  strong.^ 
"Education,"  said  Holyoake,  "is  the  basis  of  all  our 
progress."  Still,  English  societies  do  a  great  deal  compared 
with  those  of  other  countries,  and  notably  of  France,  where 
the  education  grant  was  zero  in  almost  all  the  societies.* 

B  According  to  Professor  Hall  of  the  Co-operative  Union,  this  is  no 
longer  the  case. 

8  Professor  Hall  tells  us  that  the  Rochdale  Pioneers'  Society  reduced 
their  grant  for  education  purposes  from  2^%  to  1^%  in  lOO-t.  Out 
of  802  societies  making  grants  for  educational  purposes  in  1914,  77 
made   regular   grants,  based  on   surplus-savings,  of  2J%   or  more. 

*  Author's  Note.  However,  thanks  to  the  efforts  of  the  FM6ration 
Rationale  Franqaise,  the  co-operative  societies  have  lately  made  a  grant 
of  Fr.  10,000  to  create  a  Chair  of  Co-operation  at  the  ColUge  de  France. 

t  Most  of  the  successful  societies  in  the  United  States  do  make  grants 
to  educational  work.  Even  where  the  directors  are  not  interested  in 
education  for  its  own  sake,  they  do  nevertheless  learn  before  long  that 


94       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Co-operative  education  begins  among  the  children,  but 
it  also  concerns  itself  with  adults.  It  has  for  its  object 
special  co-operative  education — organization,  history,  serv- 
ices rendered — and  also  general  instruction;  to  make  good 
co-operators  one  must  first  make  men.*  Prize  competitions 
are  organized  among  the  children,  and  the  best  compositions 
are  published  in  the  co-operative  papers.  Educational  com- 
mittees are  formed  by  the  societies,  or  by  the  Co-operative 
Union,  and  scholarships  are  given  enabling  members  to 
attend  "summer  meetings"  at  Oxford,  Cambridge,  or  Edin- 
burgh (£5  to  £6  for  a  stay  of  a  fortnight),  including 
a  series  of  ten  or  twelve  lectures  on  a  given  subject,  or  even 
scholarships  tenable  at  one  of  the  colleges  of  the  University. 
But  these  scholarships  do  not  give  great  satisfaction,  since 
they  have  for  their  result  the  creation  of  "bourgeois"  out 
of  a  few  young  workmen ;  it  would  be  preferable  to  attempt 
to  found  a  college  specially  for  the  sons  of  co-operators. 
There  are  also  numerous  conferences,  and,  it  goes  without 
saying,  libraries,  which  are  the  more  useful  in  that  books 
are  very  expensive  in  England. 

It  is  true  that  recreation — the  border  line  between  which 
and  education  is  not  easily  defined — absorbs  rather  too  large 
a  part — it  is  said  more  than  a  third — or  the  education  fund, 
notably  in  the  form  of  teas,  picnics,  concerts,  excursions, 
&c.    But  these  very  expenses  themselves  contribute  to  develop 

competitive  conditions  demand  it.  Where,  as  it  so  often  happens,  there 
can  be  neither  lowering  of  prices  below  the  current  rates  nor  substan- 
tial saving-returns  at  the  end  of  the  quarter,  what  other  method  is 
there  of  holding  the  loyalty  of  the  membership? 

*  Author's  Note.  "We  must  not  reduce  education  merely  to  teach- 
ing the  history  and  principles  of  co-operation.  It  would  be  a  narrow 
and  selfish  point  of  view  to  say  that  the  money  spent  on  education 
must  be  employed  solely  for  the  development  of  co-operation  and  to 
make  good  co-operators.  ...  It  is  necessary  that  our  members  be- 
come honourable  and  useful  men  and  women,  and  then  we  shall  have 
no  need  to  seek  special  agents  for  our  defence  in  public  bodies." 
(Speech  of  Mr.  Taylor,  member  of  the  Leeds  Society's  Educational  Com- 
mittee,  Co-operative  Newt,  21st  October,  1899.) 


H  THE  DIVISION  OF  PROFITS  96 

^H  a  good  feeling  of  brotherhood  among  the  members  and  help  to 
make  co-operative  societies  attractive  to  the  women  and  the 
children,  who  will  be  the  co-operators  of  tomorrow. * 

As  to  the  expenditure  on  solidarity — the  English  do  not 
fear  to  say  charity — it  appears  as  a  not  much  less  consider- 
able amount  in  the  budget  of  British  co-operation  (£96,000), 
although  other  institutions,  such  as  friendly  societies  or 
trade  unions,  are  more  specially  charged  with  this  expendi- 
ture. One  should  mention  the  fine  convalescent  home  es- 
tablished by  the  English  Wholesale  Society  on  its  estate  at 
Roden.  The  expenditure  on  "solidarity,"'  on  the  other 
hand,  is  a  considerable  item  in  the  balance  sheets  of  the  big 
French  societies.  A  good  proportion  of  the  profits  is  de- 
voted to  it.  The  Union  des  Cooperatives  of  Paris  gives 
£3,000  per  annum  to  works  of  solidarity. 

In  France  the  co-operative  federation  has  established  an 
education  committee,  "groups  of  pupils,"  and  circles,  as  far 
as  possible  one  for  each  society,  which  have  the  charge  of 
keeping  the  "sacred  fire"  burning.  (There  are  only  about 
thirty  at  present.)  A  few  societies  have  established  li- 
braries, and  sometimes  halls,  theatres,  conference  rooms, 
consultation  rooms,  dispensaries  and  gymnasiiuns,  and 
such  societies  are  called  Maisons  du  Peuple  (People's 
Palaces).*     At    the    time     of    the    great    movement     for 

8  Most  of  the  educational  work  in  American  societies  is  still  very 
largely  propaganda  for  the  local  organization.  But  there  is  much 
recreational  work  also.  And  during  the  past  five  or  six  years  there  has 
sprung  up  a  genuine  education  movement.  Most  of  this  is  due,  of 
course,  to  the  activities  of  The  Co-operative  League.  During  the  sea- 
son of  1921-22  many  of  the  labour  colleges  throughout  the  country 
gave  courses  of  instruction  in  Co-operation,  and  in  a  few  instances 
local  co-operatives  are  making  financial  contributions  to  this  work. 

*  Author's  Note.  Co-operative  societies  in  France  willingly  subsidize 
the  choral  societies  or  the  musicians  whom  they  engage  for  their  festi- 
vals. 

A  magnificent  collection  of  photographic  views  for  lantern  slides 
(more  than  1,000  views  of  many  countries)  was  made  by  M.  Fabre, 
one  of  the  founders  of  the  iSchool  of  Ntmes,  and  was  put  by  him  at 
the  service  of  lecturers. 


96       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

the  Popular  Universities  a  few  societies  made  them  grants, 
but  the  results  which  some  people  expected  from  this  alliance 
of  the  two  movements  have  not  been  realized.  In  Spain, 
curious  to  relate,  consumers'  societies,  although  little  devel- 
oped, have  done  much  to  establish  schools  for  children — ^which 
are  remarkably  well  kept  up — and  thus  to  supply  the  de- 
ficiency of  secular  education  in  that  country  much  as  was 
done  in  England  at  the  time  of  the  Pioneers. 

In  the  Belgian  societies  education  has  an  important  place ; 
it  is  not  that  a  large  part  of  the  bonuses  is  devoted  to  it, 
but  it  is  a  general  influence  exercised  over  the  lives  of  the 
members  by  means  of  meetings,  newspapers,  conferences, 
excursions  for  the  members'  children — ^with  entertainment  in 
foreign  socialist  centres,  &c. — and  also  by  the  anti-drink 
propaganda,  wliich  is  one  of  the  most  interesting  features 
of  Belgian  co-operation.  Brandy  or  distilled  liquors  are 
not  sold  in  the  Belgian  co-operative  societies.  Unfortu- 
nately one  cannot  say  the  same  for  those  of  France;  they 
have  not  the  same  courage.  They  give  as  an  excuse  that  if 
they  stopped  the  sale  of  alcohol  drinking  would  be  in  no  way 
reduced,  but  their  members  would  go  to  buy  dearer  and 
worse  drink  at  public-houses,  and  this  would  be  worse  both 
for  their  health  and  their  purses;  possibly  they  would  even 
be  lost  to  the  society.  Possibly,  but  if  so,  so  much  the 
worse  for  them,  for  to  subordinate  its  moral  and  educative 
action  to  its  commercial  instinct  is  to  degrade  and  to  kill 
the  co-operative  movement. 

The  Congresses  of  the  Union  Cooperative — notably  that 
of  Limoges  in  1906 — ^have  on  various  occasions  passed  the 
resolution : — 

"That  co-operative  societies  and  federations  should  do 
all  in  their  power  to  suppress  the  sale  of  alcohol ; 

"That  drinking  places  where  alcohol  is  sold  should  be 
suppressed ; 


THE  DIVISION  OF  PROFITS  97 

"That,  acting  on  the  resolution  of  M.  de  Boyve  on  co- 
operative education  (a  resolution  adopted  by  our  Congress), 
the  educational  committees  make  it  one  of  their  first  cares 
to  explain  to  co-operators  the  reasons  for  the  prohibition 
of  alcohol." 

Unfortunately  the  decisions  of  these  Congresses  have  no 
effective  sanction. 

In  Hungary,  it  appears  that  brandy  is  one  of  the  chief 
articles  of  sale  in  co-operative  stores ;  and  this  is  what  helps 
them  to  fight  against  the  competition  of  Jewish  traders! 
However,  they  only  sell  it  by  the  litre  and  for  ready  money, 
which  to  some  extent  may  be  a  deterrent  to  drunkards. 

Among  the  means  of  education  for  co-operators,  news- 
papers specially  published  by  co-operative  societies  must  be 
placed  in  the  first  rank.  One  may  even  say  that  the  develop- 
ment of  the  co-operative  movement  in  a  country  depends 
in  part  on  the  number  of  subscribers  to  its  publications. 
In  England  are  found  the  Co-operative  News,  a  weekly 
paper  with  a  circulation  of  125,000,  and  the  smaller  monthly 
paper,  The  WJieatsheaf,  with  one  of  593,000.  Switzer- 
land does  better  still,  since  this  little  country  has  182,000 
subscribers  to  its  principal  co-operative  paper.  There,  it 
should  be  mentioned,  all  co-operators  are  automatically  made 
subscribers  by  their  respective  societies,  and  the  price  of 
their  subscription  is  deducted  from  their  bonuses. 

In  France  we  are  far  behind  these  figures.  The  Action 
Cooperative,  the  organ  of  the  Federation  Nationale,  does 
not  yet  sell  20,000  copies,  and  barely  pays  its  expenses. 
There  is  also  a  monthW  papeir,  U Emancipation^^  founded  by 
our  friend  de  Boyve  in  1885,  organ  of  the  School  of  Nimes,  of 

0  In  the  United  States  there  are  a  few  independent  co-operative 
papers  with  a  small  circulation,  such  as  those  published  by  the  Central 
States  Co-operative  Wholesale,  the  Co-operative  Central  Exchange,  and 
the  fanners'  papers  which  are  primarily  interested  in  the  marketing 
problems  but  which  also  devote  considerable  space  to  consumers'  co- 


98       CONSUMERS'  CO-OPERATIVE  SOCIETIES 

which  we  are  now  the  editor,  but  this  is  not  exclusively  co- 
operative. 

Co-operative  education,  to  have  any  effect,  ought  to  be 
made  available  to  women,  not  only  for  the  general  reason 
that  it  is  they  who  educate  the  men,  but  also  for  the  special 
reason  that  women  have  naturally  little  sympathy  with  co- 
operation, although  co-operation  cannot  live  without  them. 
There  are  hardly  ever  any  bachelors  among  the  members  of 
co-operative  societies,  as  they  nearly  all  live  in  boarding 
houses.  It  is  therefore  necessary  to  convert  the  women;  it 
is  they  who  run  the  household,  who  make  the  purchases,  who 
carry  the  market  baskets.  As  has  been  stated  with  much 
insight,  the  woman  with  her  basket  is  as  much  one  of  the 
great  types  of  working  hiunanity  as  the  ploughman  with  his 
plough,  or  the  smith  with  his  hammer.  But  she  generally 
prefers  the  shop  round  the  corner  to  the  co-operative 
shop,  not  only  because  it  is  nearer — a  matter  of  no  small 
importance  to  the  tired  housekeeper  or  one  who  has  little 
free  time  between  her  work — but  also  because  she  finds  there 
more  attention  and  sometimes  small  personal  discounts  which 
the  co-operative  system  does  not  permit. 

In  1883  the  English  formed  a  Co-operative  League  for 
Women — now  the  Women's  Co-operative  Guild — ^which  has 
44,000  members,  holds  annual  congresses,  and  has  a  special 
page  in  the  Co-operative  News.  The  Guild  devotes  itself  to 
active  propaganda,  above  all,  to  the  fight  against  mercantilist 
and  individualist  tendencies  inside  the  movement,  and  strives 
to  make  it  easier  for  the  poor  to  become  co-operators.  It 
also  claims  that  women  should  have  a  larger  part  in  the  man- 
agement of  societies.     In  Holland  and  in  Hungary  similar 

operation.  The  Co-operative  League  publishes  three  monthly  periodi- 
cals:— the  magazine  Co-operation,  the  four-page  popular  paper 
Home  Co-operator,  and  a  four-page  sheet  in  which  the  last  three 
pages  are  given  to  syndicated  matter  and  the  first  page  is  left  blank 
to  be  used  by  the  local  society  for  local  matter. 


THE  DIVISION  OF  PROFITS  99 

leagues  have  been  formed,  and  not  without  success,  but  an 
attempt  made  in  France  a  few  years  ago,  under  the  aus- 
pices of  the  then  Co-operative  Union,  was  a  failure.^^ 

10  In  many  of  the  American  societies  the  Women's  Guild  is  now 
playing  a  vital  part  in  the  strengthening  of  the  movement  locally. 
Some  societies  have  actually  been  saved  from  bankruptcy  by  valiant 
action  of  the  women  at  the  last  moment.  Today  many  new  societies 
are  rapidly  coming  to  the  realization  that  active  participation  by  the 
women  in  the  educational  as  well  as  the  business  side  of  the  movement 
is  a  vital  necessity. 


CHAPTER      VIII 


MEMBERS 


Co-operative  societies  are  like  miniature  republics,  and  one 
of  their  first  principles  is  the  equality  of  members.  To 
ensure  this  equality,  it  is  the  rule  that  each  member,  no  mat- 
ter how  many  shares  he  possesses,  has  one  vote  only.  **One 
man  one  vote"  is  the  principle  of  universal  suffrage.  This 
is  very  different  from  the  system  in  operation  in  all  capitalist 
companies,  in  which  each  shareholder  has  a  number  of  votes 
more  or  less  proportionate  to  the  number  of  his  shares,  and 
in  which,  indeed,  even  eligibility  for  executive  functions  is 
often  reserved  for  very  large  shareholders.*  ^ 

Thus,  capital,  after  having  been  deprived  of  its  right  to 
the  profits,  is  almost  deprived  of  its  right  of  control.  If  we 
were  to  push  the  application  of  this  principle  to  its  logical 
conclusion  we  should  only  grant  the  privilege  of  voting  to 
purchasing  members,  and  give  them  a  number  of  votes  pro- 
portionate to  the  amount  of  their  trade.  But  the  law  does 
not  allow  this.  A  society  of  shareholders  can  only  be  gov- 
erned by  the  shareholders  as  such. 


•  Author's  Note.  French  law  permits  the  limitation  of  one  vote  per 
shareholder  at  ordinary  meetings,  but  at  special  meetings,  held  with 
the  object  of  altering  the  rules,  according  to  a  recent  law  {see  later. 
Chapter  XIV)  each  member  has  the  right  to  as  many  votes  as  shares 
held  by  him.  The  aim  of  this  measure  is  to  protect  the  large  share- 
holders against  a  possible  coalition  of  small  ones.  This  may  be  reason- 
able in  large  capitalist  companies,  but  obviously  it  is  quite  antagonistic 
to  the  co-operative  principle. 

1  Of  the  many  fraudulent  co-operative  enterprises  in  the  United 
States,  the  commonest  characteristic  is  this  limitation  of  control  to 
the  few  "elect." 

100 


MEMBERS  101 

The  equality  of  members  is  further  shown  in  the  fact  that 
the  later  comers  into  the  society  join  under  the  same  condi- 
tions and  enjoy  the  same  rights  as  the  first  member;  they 
even  pay  the  same  sum  as  share  subscription.  How  very 
different  is  the  position  in  ordinary  joint-stock  companies, 
where  any  one  wishing  to  become  a  shareholder  must  buy  a 
share,  i.  e.,  get  one  transferred  to  him  by  an  old  shareholder, 
and  if  the  company  is  in  a  flourishing  condition  he  will  have 
to  pay  a  much  higher  price  than  the  original  subscription 
paid,  perhaps  ten  times  as  much !  This  is  because  in  ordi- 
nary joint-stock  companies  the  number  of  shares  is  limited 
whereas  in  co-operative  societies  the  number  is  unlimited,  and 
the  share  register  is  always  open.  The  law  which  ensures 
that  a  co-operative  society  shall  always  be  open  to  new  mem- 
bers is  not,  however,  incompatible  with  rules  making  spe- 
cial conditions  obligatory  on  members,  such  as  that  of  be- 
longing to  a  certain  trade. 

Co-operative  societies  which  only  admit  members  of  the 
same  trade  or  profession  are  fairly  numerous.  Thus,  there 
are  societies  of  railway  employes,  of  petty  officials,  of  offi- 
cers or  workmen  from  the  same  factory,  for  example,  the  soci- 
eties of  miners  of  Anzin,  or  the  workmen  of  Creusot,  &c. 

Co-operative  societies  reserved  for  certain  classes  have 
their  advantages  and  disadvantages. 

The  advantages  are  that  the  spirit  of  solidarity — the 
"esprit  de  corps" — is  much  more  strongly  developed  among 
persons  of  the  same  trade  than  among  persons  of  varied 
occupations.  These  societies  generally  become  very  strong 
and  stable ;  they  are  well  under  the  control  of  their  director!*. 
This  is  the  reason  for  the  success  in  every  country  of  th** 
large  consumers'  societies  of  civil  servants,  or  members  of 
the  military  and  naval  services.  In  London,  the  two  socie- 
ties which  bear  the  names  the  Civil  Service  Stores  and  the 
Army  and  Navy  Stores;  in  Rome,  the  Umone  Militare;  in 
Paris  the  Societe  des  Employes  CvvUs  de  Paris,  &c.   (the 

LiBRAKY 
UNiraSITY  OF  CAIIF0»<IA 


102     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Society  of  Civil  Servants  of  Paris  and  the  Department  of  the 
Seine),  are  in  the  first  rank  of  their  respective  countries,  both 
in  membership  and  amount  of  trade. 

The  co-operative  societies  of  railway  employes  are  be- 
coming more  and  more  nimierous  in  every  country,  and  tend 
rather  to  take  the  place  of  patronal  institutions  created  by 
the  companies.  In  France,  this  has  already  been  done  by 
the  companies  of  the  P.  L.  M.  and  the  East.  It  will  prob- 
ably be  the  same  with  other  companies  still  working  on  the 
"economat  system,"  because  the  law  of  March  21st,  1910, 
which  abolished  the  economats  for  fear  of  the  truck  system, 
making  an  exception  for  them  in  the  case  of  railway  com- 
panies, has  attached  certain  very  inconvenient  conditions  to 
the  working  of  economats,  notably  that  every  five  years  the 
question  of  the  continuation  of  the  economat  must  be  sub- 
mitted to  a  referendum  of  the  company's  employes. 

There  are  also  very  prosperous  co-operative  societies  of 
officers  in  London,  Berlin,  Rome,  and  Petrograd.  In  France 
there  was  one  which  at  first  succeeded  admirably,  but  which 
has  since  failed,  and  is  now  chiefly  a  club.  These  societies 
must  not  be  confused  with  the  military  co-operative  societies, 
with  which  we  shall  deal  further  on,  which  are  started  for 
soldiers  only,  and  which  cannot  be  classed  as  "professional." 

The  disadvantage  is  that  these  societies  generally  stand 
aloof  from  the  co-operative  movement  proper,  because,  visu- 
alizing only  economy  of  distribution,  they  are  not  inter- 
ested in  any  of  the  social  ends  of  co-operation  and  are  there- 
fore liable  to  degenerate  into  mere  commercial  enterprises. 
This,  however,  does  not  prevent  them  from  rendering  very 
real  service  to  the  class  of  people  for  whom  they  are  intended. 

Socialists  look  askance  at  these  consumers'  societies  of 
special  classes  of  officials  or  workers,  especially  where  they 
consist  of  workmen  or  clerks  employed  by  the  same  man,  or 
the  same  company :  in  this  case  they  liken  them  to  disguised 
economats,  and  accuse  them  of  being  "yellow" — a  most  un- 


MEMBERS  103 

just  imputation,  if  by  it  they  mean  that  these  societies  are 
subservient  to  the  employer  or  the  company  as,  on  the  con- 
trary, they  are  often  centres  of  opposition.  And  even 
though  it  may  be  true  that  these  societies  are  often  disposed 
to  sacrifice  the  general  interests  of  co-operation  to  their 
corporate  interests,  the  same  may  be  said  of  the  socialist  co- 
operative societies,  which  only  admit  workmen,  sometimes 
only  members  of  trade  unions,  and  sometimes  only  workmen 
who  belong  to  the  socialist  party.  This  also  applies  to  those 
societies  which  only  admit  those  of  some  one  religious  faith. 
These  "red"  or  "black"  associations  are  open  to  the  same 
reproach  that  they  level  at  the  "yellow"  ones,  namely,  that 
of  working  solely  for  the  benefit  of  one  party.  Church,  or 
class,  to  the  exclusion  of  those  who  are  not  of  their  party, 
Church,  or  class.  By  so  doing  they  belie  the  character  of 
consumers'  co-operation — which,  being  universal  by  its  very 
definition,  demands  from  its  adherents  no  other  condition 
than  that  of  being  consumers — and  by  bringing  divisions  into 
the  co-operative  movement,  weaken  its  strength.  But  we 
shall  return  to  this  question  when  we  are  dealing  with  so- 
cialist co-operation. 

It  is  better,  then,  to  avoid  co-operative  societies  of  special 
classes  as  much  as  possible,  though  there  are  sometimes 
circumstances  in  which  they  become  necessary.  When  it 
is  a  question  of  workshops  or  mines  lying  far  outside  the 
towns  it  is  necessary  to  form  co-operative  societies  among 
workmen  of  the  same  factory,  there  being  no  other  possible 
members  in  the  district.  And  as  regards  railway  employes, 
as  the  companies  allow  them  special  advantages  for  trans- 
port of  their  provisions — which  would  not  be  granted  to 
ordinary  traders — it  would  naturally  be  impossible  for  these 
societies  to  open  their  ranks  to  outsiders. - 

2  Almost  all  of  the  so-callrd  "railroad  men's"  societies  in  the  United 
States  are  open  to  all.  They  have  been  started  by  members  of  the 
railroad  brotherhoods  but  from  the  beginning  they  grant  full  member- 


104     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Of  course,  freedom  of  entrance  should  also  carry  with  it 
freedom  of  withdrawal,  and  this  is  the  general  rule,  although 
it  is  not  always  easy  to  apply  it  in  practice. 

If  a  member's  liberty  to  withdraw  depends — as  in  the 
case  of  joint-stock  companies — on  the  selling  of  his  share, 
in  other  words,  on  his  finding  a  purchaser,  this  liberty  is 
greatly  limited,  because  shares  in  co-operative  societies  have 
not  the  large  market  possessed  by  shares  of  the  Bank  of 
France,  or  large  industrial  companies ;  it  may  be  rather 
difficult  therefore  to  find  some  one  willing  to  purchase  a 
share  or  shares.  This  difficulty  is  further  increased  if  the 
society  reserves  the  right,  as  many  societies  do,  to  approve 
or  disapprove  of  the  transferee.  At  the  same  time  it  is  ob- 
vious that  this  right  ought  to  be  reserved,  because  it  would 
not  always  be  advisable  to  admit  the  first  comer  to  replace 
a  retiring  member;  co-operative  societies  are  associations  of 
persons  as  distinct  from  joint-stock  companies,  which  are 
merely  associations  of  capital.  The  most  liberal  system 
would  be  to  grant  the  right  of  free  resignation  to  the  mem- 
ber and  to  refund  him  his  share  money  on  his  resignation. 
But  here  the  society  would  expose  itself  to  great  dangers,  as 
it  would  only  be  necessary  for  discontented  members — and 
there  are  always  such — to  organize  a  plot  simultaneously 
to  claim  the  repayment  of  their  shares  to  embarrass  the  so- 
ciety very  seriously,  perhaps  to  bring  about  its  ruin.  In 
order  to  avert  this  danger,  or  at  least  to  render  it  less  grave, 
the  society  should  reserve  to  itself  the  right  to  delay  repay- 
ment for  a  period,  on  the  lines  of  the  "safeguard"  clause  of 
the  Savings  Banks.  Very  often  the  rules  only  permit  repay- 
ment after  the  death  of  the  member,  or  on  his  leaving  the 
town;  indeed,  the  changing  of  residence  ought  to  be  a  suffi- 
cient reason,  in  large  towns  at  least. 

ship  privileges  to  all  other  consumers.  We  do  have  other  groups,  how- 
ever, which  make  their  societies  exclusive.  This  feature  is  very  com- 
mon to  societies  among  municipal  employes,  post  office  employes,  and 
employes  of  certain  large  corporations. 


MEMBERS 


105 


In  principle,  therefore,  the  member  is  free  to  join  or  to 
leave  the  society.  But  has  the  society  the  right  to  expel 
the  member,  if  his  presence  should  be  deemed  prejudicial  to 
the  interests  of  the  society?  Yes,  in  principle,  and  this 
right  is  provided  for  in  the  rules  of  the  majority  of  societies. 
However,  a  recent  law  (1913)  has  placed  a  serious  obstacle 
in  the  way  of  the  exercising  of  this  right,  by  exacting  as  a 
condition  of  this  expulsion  the  calling  of  a  special  general 
meeting  under  conditions  rigorously  imposed  by  law  (see 
later.  Chapter  XIII),  that  is  to  say,  at  least  three- 
quarters  of  the  shares  must  be  represented,  and  the  decision 
must  be  passed  by  a  majority  of  two-thirds  of  the  votes. 
This  is  equivalent  in  large  societies  to  a  prohibition  of  ex- 
pulsion. Probably  when  passing  this  protective  measure  for 
members  the  legislator  was  not  thinking  of  co-operative  so- 
cieties; he  does  not  mention  them.  A  revision  of  this  law 
seems  to  be  necessary. 

There  is  also  the  much  discussed  question  as  to  whether 
a  co-operative  society  should  be  open  to  all  the  members  of 
a  family,  or  to  one  member  only.  As  a  matter  of  fact  there 
is  generally  only  one  person  in  a  household  who  becomes  a 
member  of  the  consumers'  society — the  husband,  although  it 
is  really  the  wife  who  docs  all  the  buying.  As  the  purchases 
are  made  for  the  whole  household  it  seems  unnecessary  for 
the  other  members  of  the  family  to  join  the  society.  They 
would  have  to  pay  the  necessary  sum  to  become  shareholders, 
while  neither  they  nor  the  society  would  gain  anything — at 
least  in  turnover — ^because  the  store  would  not  gain  more 
custom  thereby. 

But  it  may  be  said  that  it  is  advisable  for  other  members 
of  the  family — particularly  the  women — to  become  share- 
holders, in  order  that  they  may  be  able  to  take  part  in  the 
general  meetings  and  to  use  their  influence  in  the  adminis- 
tration of  the  society.  Women  are  at  present  more  or  less 
excluded,  owing  to  the  fact  that  they  are  scarcely  ever  mem- 


106     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

bers.  For  this  reason  the  Women's  Co-operative  Guild 
urgently  presses  for  free  admission  of  all  the  members  of 
the  family,  for  what  English  co-operators  call  open  memher- 
ship.  Moreover,  being  a  member  has  unquestionable  value 
for  young  men  and  women,  from  the  educational  standpoint 
at  least,  and  it  assures  the  recruiting  of  new  generations. 

The  experiences  of  several  large  societies  which  have 
adopted  the  principle  of  open  membership  seem  to  demon- 
strate that  this  system  has  the  effect  of  materially  increasing 
the  amount  of  trade  done  by  each  family,  contrary  to  what 
we  might  have  expected.  This  may  be  due  to  a  more 
constant  frequenting  of  the  shop  by  all  the  various  members 
of  the  family,  and  a  more  active  sense  of  social  duty,  once 
they  have  acquired  the  title  of  member. 

Finally,  this  system  has  the  advantage  of  increasing  the 
proportion  of  the  subscribed  capital  as  compared  with  the 
amount  of  sales,  as  the  family  which  was  formerly  content 
to  have  one  share  only  now  subscribes  for  several;  we  shall 
see  in  the  following  chapter  that  this  increase  of  capital  is 
highly  desirable.^ 

3  Most  of  the  Societies  in  the  United  States  permit  more  than  one 
member  of  the  family  to  join.  Usually,  however,  considerable  urging 
is  required  before  large  numbers  of  women  avail  themselves  of  the 
opportunity. 


CHAPTEalX 
CAPITAL 

(1 )  The  Formation  of  Capital 

The  capital  of  co-operative  societies  is  formed,  first  of  all, 
as  in  all  other  forms  of  association,  by  the  subscriptions  of 
those  who  become  members,  that  is  to  say  by  the  subscrip- 
tions for  shares.  The  French  law  of  1867,  in  order  to  make 
these  payments  possible  for  every  purse,  reduced  the  amount 
of  a  share  in  a  co-operative  society  to  £1,  and  by  a  recent 
law  the  maximum  is  fixed  at  £4,  though  for  ordinary 
capitalist  concerns  the  share  is  generally  £20.^  The  law 
also  allows  societies  to  be  legally  constituted  on  payment 
of  one-tenth  of  the  share,  that  is  to  say,  the  very  small 
sum  of  2s.  per  member.  In  England  the  share  is  £1  for  both 
societies  and  companies.  It  was  therefore  not  necessary  to 
have  a  special  law  in  favour  of  co-operative  societies. 

This  is  very  little.  Fortunately,  consumers'  societies,  by 
the  special  nature  of  their  business,  do  not  require  a  large 
capital,  for  the  reason  that  by  their  sales  the  capital  renews 
itself  rapidly,  and  even  daily,  as  in  bakers'  shops,  so  that  a 
small  capital  is  enough  for  a  large  business.     This  is  the 

1  A  few  states  in  the  United  States  have  laws  governing  the  vahie 
of  a  share  and  limiting  the  number  of  shares  to  a  member  of  a  co- 
operative. Thus  New  York  State  sets  a  share  at  $5  and  permits  no 
individual  to  hold  more  than  1000  shares.  Generally,  however,  the 
local  society  is  free  to  determine  what  value  it  wishes  to  place  on  a 
share  and  how  many  it  will  permit  to  a  single  member.  Tliere  are 
societies  which  permit  full  membership  privileges  to  the  owner  of  one 
$5  share,  and  there  are  others  which  ask  of  each  member  as  high  as 
$50  or  $100.  Very  few  can  get  along  well  unless  they  receive  at 
least  $20  or  $25. 

107 


108     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

principal  reason  for  the  success  of  consumers*  co-operative 
societies  as  against  producers'  societies,  from  the  point  of 
view  of  ease  of  formation  and  speed  of  development. 

Consumers'  societies  have  been  started  and  have  succeeded 
without  any  original  capital  except  a  small  entrance  fee.  As 
they  buy  their  goods  on  credit  from  the  wholesalers  and  sell 
them  for  cash  to  their  members,  they  can  start  without 
money,  except  that  necessary  for  their  modest  equipment.^ 
Thus  the  Bale  Society,  which  is  one  of  the  strongest  in 
Europe  (37,000  members,  and  a  turnover  of  £1,080,000), 
started  without  capital,  and  an  entrance  fee  of  only  2s.  6d. 
In  Belgium,  the  law  does  not  require  any  subscribed  capital. 
The  Vooniit  only  requires  an  entrance  fee  of  lOd.,  and  2 /^^d. 
for  a  pass  book.  These  societies  obtain  sufficient  working 
capital  by  selling  tokens  to  their  members,  which  serve  as 
payment  for  bread  and  other  goods.  In  Germany,  the  law 
permits  the  payment  of  one  share  of  Is.  only  but  in  practice 
the  share  is  30s. 

Nevertheless,  the  capital  accumulated  under  such  condi- 
tions would  be  insufficient  if  the  capital  of  consumers'  socie- 
ties were  not  endowed  with  the  remarkable  virtue  of  increas- 
ing automatically  by  the  progressive  additions  of  the  divi- 
dends which  the  members  often  leave,  either  wholly  or  in 
part,  in  the  hands  of  the  society.  Members  are  always  asked 
to  do  this,  and  even  compelled  to  do  so  when  they  have  only 

2  We  know  of  very  few  societies  in  the  United  States  capable  of 
starting  this  way  at  the  present  time.  Even  the  poorest  of  co-opera- 
tors would  advise  that  the  group  vi'hich  could  not  raise  any  capital 
through  the  regular  channels  of  assessment  upon  each  member  had 
better  not   attempt  to  organize  at  all. 

Yet  there  are  one  or  two  exceptions  to  this  rule.  A  society  which 
was  organized  in  Reading,  Pa.,  in  1914  and  began  business  with  a 
capital  of  a  bag  of  cornmeal,  in  1921  had  resources  of  $18,000.  And  a 
co-operative  restaurant  in  Brooklyn  was  opened  in  1910  without  one 
cent  of  capital  stock  paid  in,  conducting  its  initial  operations  on  $200 
of  borrowed  capital.  At  the  end  of  1921  this  Society  had  assets  of 
$13,000,  although  not  a  cent  of  capital  had  ever  been  contributed  by 
the  membership. 


CAPITAL  109 

paid  up  a  tenth  or  other  fraction  of  their  share.  Their  divi- 
dends are  retained  by  the  society  until  the  share  is  "freed," 
as  it  is  called,  that  is  to  say  fully  paid  up. 

Not  only  do  a  great  number  of  members  leave  their 
dividends  on  deposit  with  the  society,  but  some  bring  to  it 
their  savings,  as  to  a  savings  bank,  either  on  current  deposit 
or  on  deposit  for  several  years. 

If  the  capital  of  the  British  co-operative  societies  had 
been  built  up  by  the  subscriptions  for  shares  at  one  share 
per  member  only,  that  would  only  make  a  total  capital  for 
the  4  million  co-operators  of  4  million  pounds,  but  the  cap- 
ital actually  raised  in  1920  was  76  millions.* 

Thus  the  capital  of  societies  is  fed  from  three  sources:  (a) 
Shares  subscribed  on  entrance;  (b)  dividends  left  on  deposit 
or  converted  into  shares;  (c)  loans  from  members.  Of 
these  three  sources  the  first  is  the  least  important;  the 
second  brings  in  the  most  money,  especially  in  England; 
in  Switzerland,  as  we  shall  see,  the  third  is  the  most  impor- 
tant. Moreover,  consumers'  co-operative  societies  do  not 
seek  large  amounts  of  capital,  on  the  contrary,  they  are 
opposed  to  them.  Many  societies,  by  their  rules,  limit  the 
number  of  shares  which  any  member  can  hold,  generally  to 
five,  following  the  example  of  the  Rochdale  Pioneers.'     In 

•  Author's  Note.  In  this  figure  is  included  the  figures  for  tlie  two 
wholesale  societies  (almost  £8,000,000).  The  capital  of  the  retail 
societies  was  £48,24-0,000  in  1914,  made  up  as  follows: — 

Share  capital       £39,920,000 

Loan  capital        £  5,400,000 

Reserve  fund       £  2,920,000 

In  1920  the  share  capital  reached  £76,000,000  and  loan  capital  £10,- 
000,000.  The  increase  over  1914  is  not  in  proportion  to  the  increase  in 
turnover. 

Tlie  same  miracle  of  the  multiplication  of  pennies  is  realized  by  the 
individual  members  also.  Thus,  the  example  of  a  member  of  the  Lan- 
ark Society  is  quoted,  who,  having  subscribed  for  a  few  shares,  left 
all  profits  with  the  society,  and  found  himself  after  36  years  the 
possessor  of  £944. 

3  Professor  Hall  is  authority  for  the  following  statement: — 


110     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Austria  the  rules  only  allow  one  share  per  member,  and  the 
share  is  only  of  the  value  of  8s.  4d.  In  England,  the  law 
itself  fixes  a  limit,  though  it  is  fairly  high  (£200),  that  is  200 
shares  per  member.  In  France  there  is  no  legal  limit  to  the 
amount  of  capital  a  member  may  own — even  in  co-operative 
societies.  The  law  once  limited  the  total  capital  of  a  society 
to  £8,000  (with  power  to  raise  a  similar  sum  each  year), 
but  tliis  restriction  no  longer  exists. 

What  is  the  reason  for  this  unusual  mistrust  of  capital.'' 
It  is  explainable  on  three  grounds : — 

(a)  First,  siince  the  very  spirit  of  the  co-operative  move- 
ment is  anti-capitalist,  and  since  it  seeks  to  destroy  the 
domination  of  capital,  it  would  seem  hardly  wise  to  open 
the  door  and  let  capital  install  itself  as  a  master  of  the 
society.  And  if  some  member — a  bourgeois — owned  a 
large  number  of  shares,  there  would  be  a  fear  that  he  would 
gain  undue  influence  in  spite  of  the  rule  which  limits  the 
votes  to  one  vote  per  member;  it  would  be  enough  if  he 
threatened  to  leave  and  to  withdraw  his  capital. 

(b)  Secondly,  because  the  capital  of  co-operative  socie- 
ties, being  built  up  in  the  ways  we  have  just  indicated, 
constitutes  a  danger  as  much  as  an  advantage  to  the 
society.  In  fact,  all  of  the  capital  which  comes  from  the 
dividends  left  on  deposit  is  repayable  on  demand  at  the  wish 
of  the  depositor.  And  the  share  capital  itself  has  this 
difference  from  that  of  ordinary  capitalist  enterprises — that 
it  is  withdrawable  in  case  the  member  leaves  the  society. 
This  is  a  very  dangerous  financial  position,  and  one  which 
an  ordinary  business  cannot  accept  without  risk  of  bank- 

"The  rules  of  the  Rochdale  Pioneers'  Society  in  1854  limited  the 
holding  of  any  one  member  to  fifty  shares.  It  is  not  known  when 
the  limit  was  extended,  but  from  1878,  if  not  earlier,  the  rules  of 
the  society  permitted  a  member  to  hold  one  hundred  shares.  This  rule 
continued  to  operate  until  1912,  when  the  rules  of  the  society  were 
again  revised.  There  is  now  no  limit  to  the  number  of  shares  a  mem- 
ber may  bold  other  than  that  set  by  Act  of  Parliament," 


CAPITAL  111 

niptcy.*  The  co-operative  societies  can  do  so,  thanks  to  the 
spirit  of  solidarity  among  the  members,  who  are  not  ordinary 
customers  and  who  do  not  wish  to  injure  the  society  of  which 
they  are  themselves  a  part.  The  late  war  furnished 
in  every  country  an  admirable  example  of  this  loyalty.  At 
the  very  moment  when  the  ordinary  banks  and  savings  banks 
were  besieged  by  a  rush  of  their  depositors,  the  consumers' 
societies  generally  succeeded  in  warding  off  or  checking 
quickly  all  panic  among  their  members.  In  England,  in 
the  course  of  one  year  (1915)  co-operative  capital — con- 
trary to  all  anticipations — increased  by  more  than  £4,000,- 
000. 

(c)  Thirdly,  because  the  consumers'  societies,  as  long 
as  they  confine  themselves  to  their  ordinary  business,  do  not 
know  what  to  do  with  surplus  capital,  and  can  find  no  use 
for  it.  What  is  the  object,  therefore,  of  running  the  risks, 
which  we  have  just  indicated,  if  they  are  not  compensated 
for  by  any  advantage? 

Lately  there  has  been  a  reaction  against  this  spirit. 
Co-operators  have  learned  to  appreciate,  if  not  the  merits, 

•  Author's  Note.  To  avoid  or  limit  this  danger  the  Swiss  societies 
prefer  borrowing  in  the  form  of  bonds  repayable  three  or  Ave  years 
from  the  date  of  issue.  This  precaution  is  the  more  necessary  in  that 
they  give  far  more  credit  than  do  the  co-operative  societies  of  other 
countries.  While  in  Britain  the  loan  capital  is  only  one-eighth  part 
of  the  share  capital,  in  Switzerland  the  proportion  is  reversed;  the 
share  capital  is  only  one-eighth  of  the  loan  capital. 

On  the  other  hand,  the  reserves  in  Switzerland  are  far  more  than 
double  the  share  capital,  which  makes  for  safety,  since  the  reserve 
fund  is  the  indivisible  and  collective  property  of  the  society  and  can- 
not be  withdrawn,  while  the  share  capital  is  the  Individual  property 
of  the  members.  The  following  table  shows  the  comparative  division 
of  capital  in  the  two  countries: — 

Britain.       Switzerland. 

Share  capital        83%     ...      9% 

Reserve  capital              ...  6%     ...     21% 

Loan  capital        11%     ...     70% 


100%     , . .     100% 


112     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

at  least  the  advantages  of  capital — this  statement  may  give 
the  ordinary  economists  an  opportunity  for  a  facile  triumph ! 
— and  as  their  ambitions  have  increased  they  have  found 
themselves  hampered  by  the  limits  which  they  themselves 
have  placed  on  capital.  It  is  obvious  that  consumers' 
societies  cannot  think  of  engaging  in  production — which  is 
their  great  object — without  having  the  necessary  capital  to 
build  factories  or  to  buy  land.  This  is  why  the  consumers' 
society  in  Hamburg,  which  has  the  significant  name  "Pro- 
duktion,"  insists  that  each  member  shall  have  at  least  four 
shares  of  50  marks  each — that  is  £10.  The  old  mistrusts 
are  in  part  dissipated,  since,  as  long  as  capital  has  neither 
the  right  of  control  nor  a  share  in  the  profits,  its  domination 
is  hardly  to  be  feared,  and  the  desire  for  protection  against 
its  encroachments  seems  almost  fantastic.  Today,  co-oper- 
ators, fearing  rather  the  difficulty  of  raising  capital,  are  pre- 
occupied with  the  means  of  attracting  it.  If  there  are  capi- 
talists generous  enough  to  be  prepared  to  subscribe  for  a 
large  niunber  of  shares  one  can  hardly  see  any  reason  why 
the  society  should  fix  a  stern  limit  to  their  goodwill  and  thus 
deprive  itself  of  a  useful  addition  to  its  resources.  If  it  is 
feared  that  they  will  embarrass  the  society  by  withdrawing 
in  a  fit  of  bad  temper  and  taking  with  them  their  capital,  it 
is  possible  to  guard  against  this  risk  by  attaching  such 
conditions  as  are  deemed  necessary  to  the  rules  for  the  repay- 
ment of  shares  (see  above,  pp.  110,  111). 

Further,  in  Britain,  voices  have  been  raised  calling  for  the 
abolition  of  all  rules  limiting  the  number  of  shares  which 
can  be  subscribed  for  by  a  member,  and  even  for  the  abolition 
of  the  limit  of  £200  imposed  by  law;  and  in  all  the  con- 
gresses it  has  been  pointed  out  that  it  is  the  duty  of  members 
to  leave  their  dividends  on  deposit  with  the  society. 

As  for  the  French  societies,  up  to  the  present  their  de- 
velopment has  not  been  such  as  to  require  much  capital. 
However,  ways  of  increasing  their  resources  are  now  engag- 


CAPITAL  113 

ing  their  serious  consideration.  It  is  customary  today  in 
French  societies  (tliough  not  legally  necessary)  to  fix  the 
value  of  the  share  at  100  fr.  (£4).  But  they  do  not  count 
much  on  the  subscriptions  of  their  members,  and  still  less  do 
they  wish  to  apply  to  capitalists  for  the  necessary  capital. 
They  have  turned  to  the  State  and  ask  it  to  supply  capital, 
as  the  co-operative  productive  associations  and  the  agricul- 
tural and  credit  associations  have  done. 

Since  1897  the  State  has  set  aside  its  part  of  the  profits 
of  the  Bank  of  France,  which  today  numbers  a  good  number 
of  millions  (francs),  at  the  disposal  of  agricultural  credit 
societies,  and,  later,  productive  societies.  Since  1911  a  sum 
of  £80,000  has  been  placed  at  the  disposal  of  workmen's 
productive  societies.  Relying  on  these  precedents,  the  na- 
tional federation  of  consumers'  societies  has  also  secured 
an  advance  of  £80,000,  which  shall  renew  itself  as  it  is  paid. 

It  is  a  modest  sum,  which  cannot  be  of  any  use  unless  it 
is  concentrated  in  the  hands  of  a  central  body  like  the  Whole- 
sale Society,  but  the  State  could  not  confine  its  advances  to 
the  Wholesale  without  raising  a  storm  of  protest  from  the 
societies  which  are  not  affiliated  to  it.* 

(2)  The  Reward  of  Capital 

As  we  know,  it  is  the  rule  that  capital  has  no  share  in 
the  profits.  Where  it  is  given  a  share  the  society  ceases  to 
be  co-operative,  even  if  it  wrongly  calls  itself  such. 

This  is  well  known,  but  a  thing  that  is  not  generally 
realized  is  the  magnitude  of  the  sacrifice  which  is  thereby 
imposed  on  the  holders  of  share  capital.  In  fact,  the 
profit  of  which  it  is  deprived  is  not  the  ordinary  modest 

*  In  the  United  States  a  few  of  the  agricultural  marketing  associa- 
tions have  lately  been  able  to  get  such  help  from  the  federal  govern- 
ment or  from  one  or  two  of  the  states,  but  the  consumers'  societies 
still  have  recourse  only  to  the  private  banks,  two  or  three  co-operative 
or  labour  banks,  and  individual  co-operators. 


114      CONSUMERS'  CO-OPERATIVE  SOCIETIES 

commercial  profit  of  10  or  12  per  cent.,  but  a  profit  of  30  per 
cent,  or  more. 

If  the  total  profits  of  British  co-operative  societies, 
namely,  £25,000,000,  were  given  to  share  capital,  which 
was  (in  1920)  £86,000,000,  it  would  make  33  per 
cent.  For  some  societies  even  higher  rates  could  be  found. 
It  is  only  the  old  insurance  company  or  the  mining  company 
which  can  afford  us  an  example  of  equal  or  higher  profits. 
These  figures  refer  to  the  profits  and  capital  of  the  retail 
societies.  It  is  a  very  different  matter  with  the  two  British 
wholesale  societies — £2,000,000  of  profit  for  £4,000,000  of 
share  capital,  but  it  should  be  said  that  this  share  capital 
only  represents  a  part  of  their  total  capital.  Moreover,  in 
1917,  the  profit  decreased  greatly,  and  in  1921  there  was  a 
great  loss  because  the  wholesales  tried  to  fight  against  the 
increase  in  prices. 

When  Fourier  dazzled  the  eyes  of  the  world  with  the  div- 
idends of  his  Phalan<stere — 24  to  26  per  cent.,  as  he  said — 
he  doubtless  had  a  vague  vision  of  consumers'  societies  which 
would  realize  them! 

Moreover,  it  must  be  admitted  that  when  the  Rochdale 
Pioneers  laid  down  their  famous  principle  of  distributing 
the  profits  among  the  consumers  they  thought  that  these 
profits  would  be  of  little  importance  and,  perhaps,  if  they 
had  suspected  the  rate  which  would  one  day  be  reached,  these 
early  shareholders  would  have  hesitated  to  renounce  them  in 
advance. 

Thus  is  the  question  of  profit  settled;  but  there  remains 
the  question  of  interest,  which  is  altogether  another  matter. 

Ouglit  a  society  to  pay  interest  to  capital — either  share 
capital  or  loan  capital?  The  answer  to  this  question  does 
not  seem  to  admit  of  doubt.  In  no  case  does  interest 
upon  capital  appear  to  be  more  legitimate  than  in  this  one. 
It  is,  in  fact,  a  question  of  capital  which  is  undoubtedly  the 
fruit  of  work  and  savings,  and  which  the  society  received 


i 


CAPITAL  115 

from  its  own  members.  Further,  it  goes  without  saying 
that  this  capital  is  of  great  service  to  the  society,  it  is  fair 
that  this  service  should  be  paid  for.  Moreover,  the  rate  of 
interest  is  generally  limited  to  5  per  cent.,  which  is  the  rule 
in  nearly  all  societies.  It  does  not  fail,  however,  to  excite  a 
fairly  strong  opposition,  and  not  only  from  the  socialist 
side.  In  Grermany  it  is  the  rule  not  to  pay  interest  on  share 
capital.  It  may  be  said  that  if  the  share-holding  member, 
or  lending  member,  is  loyal  to  the  society  he  gains  nothing 
by  getting  interest  on  his  money,  because  he  will  get  it  in 
the  form  of  an  extra  bonus  on  his  purchases.  He  ought  to 
see  that  if  the  social  profits  are  to  be  as  high  as  possible  they 
should  be  free  from  all  interest  charges.  If,  on  the  other 
hand,  the  member  does  not  use  the  shop,  and  so  fails  in  his 
duty  as  a  member,  it  is  only  fair  to  punish  him  by  refusing 
him  any  interest  on  his  shares. 

This  does  not  really  get  to  the  root  of  the  question.  The 
reasoning  would  be  right  if  all  the  members  had  brought  to 
the  society  an  equal  amount  of  capital — either  in  the  form  of 
shares  or  of  loans — and  if  it  were  in  their  power  to  make  the 
same  amount  of  purchases;  in  this  case  it  would  be  of  no 
importance  whether  they  obtained  their  interest  separately 
or  as  part  of  the  dividend.  But  neither  one  nor  the  other  of 
these  conditions  is,  or  can  be,  fulfilled,  and  therefore  it 
seems  fair  that  service  rendered  in  the  form  of  capital 
advanced,  which  is  not  of  less  value  that  that  rendered  in 
the  form  of  purchases,  should  be  rewarded.  According  to 
Professor  Hall  (quoted  in  the  Co-operative  News),  half  of 
the  share  capital  is  owned  by  one-tenth  of  the  members. 
Half  of  the  British  co-operators  do  not  own  more  than  three 
shares.  It  is  curious  to  observe  that  in  the  little  world  of 
co-operators  the  division  of  wealth  is  scarcely  less  unequal 
than  in  the  great  world  of  individualists. 

Is  it  necessary  to  say  further,  that,  if  the  society  does  not 
allow  any  interest  on  capital,  no  member  will  subscribe  for 


116  CONSUMERS'  CO-OPERATIVE  SOCIETIES 
more  than  one  share,  since  the  possession  of  a  single  share 
entitles  him  to  make  all  the  purchases  he  desires  and  to 
gain  the  dividend,  and  that  the  subscription  for  a  larger  num- 
ber of  shares  will  not  bring  with  it  any  advantage?  By 
this  course  the  society  limits  its  share  capital  to  a  minimum 
incompatible  with  progress.  This  is  exactly  what  happens 
in  Germany.  Each  member  takes  up  one  share  only.  There- 
fore, it  is  necessary  to  make  the  shares  expensive — 30s.,  and 
sometimes  £3. 

Thus  it  happens  that  even  those  societies  which  wish  to 
remain  faithful  to  the  principle  of  the  abolition  of  interest, 
confine  themselves  to  the  formality  of  paying  no  interest  on 
the  first  share  subscribed  for  by  each  member,  but  allow 
interest  on  all  further  shares  for  Which  a  member  wishes  to 
subscribe,  and,  in  any  case,  on  money  which  he  leaves  on 
deposit,  or  invests  in  the  form  of  a  loan.  This  was  the  rule 
in  the  Wholesale  Society  of  the  old  French  Co-operative 
Union  (which  has  disappeared  since  the  amalgamation),  and 
it  is  the  rule  followed  in  the  big  "Prodtoktion"  society  at 
Hamburg.^ 

(3)  The  Use  of  Capital 

We  have  just  remarked,  that  as  soon  as  a  consumers' 
society  has  succeeded  in  getting  together  a  good  number  of 
members  it  does  not  know  how  to  use  such  of  its  capital  as 
is  in  the  excess  of  the  needs  of  its  business,  and  it  finds  itself 
embarrased  by  its  riches.  Thus  the  British  societies,  both 
retail  and  wholesale,  have  in  the  form  of  shares  and  deposits 
nearly  £60,000,000,  but  they  only  need  at  the  most  half 
of  this  as  working  capital.  Therefore,  the  question  arises 
how  to  employ  the  superabundant  capital. 

5  A  few  societies  in  the  United  States  are  able  to  follow  this  plan  of 
paying  interest  only  on  shares  subsequent  to  the  first,  but  usually 
(except  in  the  weakest  societies  where  there  is  no  money  for  payment 
of  any  interest  at  all)  the  current  rate  of  interest  is  paid  on  all  shares. 
Some  of  the  more  radical  societies  pay  interest  only  on  loan  capital. 


CAPITAL  117 

If  the  money  be  invested,  as  the  bourgeois  invest,  in 
consols  or  other  securities,  it  is  giving  to  the  capitalist 
organizations  those  very  arms  which  have  been  forged  for 
use  against  them;  it  is  helping  those  very  businesses  which 
it  is  sought  to  supersede.  What  is  needed  is  that  co-oper- 
ation should  use  these  resources  for  its  own  ends,  namely, 
in  building  factories  and  buying  farms,  or  helping  workmen's 
productive  associations;  the  question  which  of  these  two 
systems  is  to  be  chosen  is  so  difficult  that  it  will  be  the 
subject  of  a  special  chapter.  (See  below.  Chapter,  X, 
"Housing.")  For  such  great  enterprises  as  these  co- 
operation need  not  fear  having  too  much  capital.  The 
English  and  Scottish  Wholesale  Societies  have  invested 
in  their  productive  enterprises  more  than  £4,000,000  of 
capital,  and  the  retail  societies  have  invested  half  this  sum. 
The  late  war  will  have  the  effect  of  giving  a  strong  impetus 
to  this  movement,  for  the  rise  in  prices  has  made  co-oper- 
ators feel  the  necessity  of  going  back  to  the  very  sources 
of  production  and  controlling  raw  materials  first  of  all  if 
they  wish  to  remedy  the  position.  (See  Chapter  XV, 
Production  by  Consumers'  Societies.) 

There  is  yet  another  and  less  ambitious  way  of  using  it, 
but  one  which  is  of  great  use  for  the  working,  in  fact,  for 
all  classes,  and  which  offers  the  best  possible  security,  that 
is  the  building  of  comfortable  and  cheap  houses  or  flats. 
But  these  uses  are  far  from  absorbing  all  the  available 
capital,  so  that  more  than  a  quarter  of  it  is  used  in  various 
other  ways — public  funds,  mortgages,  &c. — and  sometimes 
goes  even  into  industrial  enterprises  competing  with  co-opera- 
tive ones. 

Still,  partly  by  its  use  in  production  and  partly  by  the 
building  of  workmen's  houses,  or  by  the  increase  in  the 
range  of  a  consumers'  society's  business,  the  greater  part 
of  the  capital  accumulated  by  co-operation  returns  to  the 
people.     In    this    way     consumers'     co-operative    societies 


118     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

already  do  a  better  social  work  than  the  savings  banks, 
because  the  millions  paid  into  savings  banks  are  nearly  all 
invested  in  consols  (above  all,  in  France)  or  in  capitalist 
securities.  As  M.  Luzzatti  says,  with  his  usual  eloquence, 
"In  the  savings  bank  the  poor  man's  mite  is  lent  to  the 
rich,  while  in  co-operation  the  poor  man's  mite  is  lent  to 
the  poor." 

In  France,  societies  have  not  been  so  successful  as  to 
be  much  worried  by  the  question  of  how  tb  use  their  capital. 
As  soon  as  they  have  sufficient  capital  their  first  thought 
is  to  build  a  fine  shop,  and  many  of  them  do  not  even  wait 
to  have  enough,  but  borrow  from  their  members  for  this 
purpose.  This  mania  for  building  can  be  justified  in  part 
by  the  wish  to  show  the  strength  of  the  society,  and  as  an 
advertisement  in  rivalry  to  the  big  shops.  However  it  is  a 
dangerous  thing,  and  has  brought  several  big  Parisian 
societies  to  ruin.  For  many  of  them,  the  day  when  they 
opened  their  "palace"  has  marked  the  beginning  of  their 
decay.^ 

6  Such  impatience  is  not  unknown  in  the  United  States.  The  more 
common  form  of  extravagance,  however,  is  laying  in  excessive  stocks 
of  goods  and  over-furnishing  the  store  or  employing  too  many  clerks. 


CHAPTER     X 

VARIOUS     TYPES     OF     CONSUMERS* 
SOCIETIES 

A  consumers'  society,  to  fulfil  completely  the  definition 
which  we  have  given  of  it,  ought  to  be  able  to  supply  its  mem- 
bers with  everything  they  may  require,  so  that  the  mem- 
bers need  not  spend  anything  outside  the  co-operative  store. 
But  such  a  complete  realization  is  impossible  under  the 
existing  economic  organization.  There  are  some  social  re- 
quirements which  are  supplied  by  the  State,  by  municipali- 
ties, by  private  monopolies,,  or  by  the  liberal  professions, 
which  are  not  yet,  and  which  never  will  be,  supplied  co-opera- 
tively. We  cannot,  for  example,  go  to  the  co-operative  store 
to  pay  taxes,  law  costs,  examination  fees,  or  lawyers'  or  doc- 
tors' fees,  nor  even  to  purchase  tickets  for  the  train,  tram, 
or  theatre,  though,  indeed,  this  ought  not  to  be  impossible 
with  regard  to  these  last-named  items. ^  But,  making  allow- 
ances for  all  these  expenses,  which  at  best  do  not  occupy  an 
important  place  in  the  workman's  budget — at  the  most  5  per 
cent.,  according  to  monographs  published  on  the  subject — a 
co-operative  store  should  very  easily  supply  everything  else 
— food,  clothing,  housing,  furniture,  ornaments,  books,  even 
medicine,  everything,  in  fact,  a  man  needs  from  the  cradle  to 
the  grave,  from  the  layette  to  the  shroud.     We  find  all  these 

1  There  are  great  differences  of  opinion  on  this  subject.  Already 
there  are  co-operative  medical  societies  in  Europe  and  the  excellent 
sick  and  death  benefit  societies  in  the  United  States  which  supply 
doctors,  nurses  and  hospital  care  to  the  members.  We  already  have 
co-operatively  owned  and  controlled  moving  picture  theatres.  And 
many  of  our  co-operators  look  forward  to  the  time  when  vast  whole- 
sale societies  shall  control  the  railroads,  and  when  the  activities  of 
the  co-operatives  shall  so  encroach  upon  the  domains  of  the  Stat« 
'^hat  its  taxing  power  will  be  reduced  to  the  vanishing  point. 

119 


120     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

services  are  rendered  by  co-operative  societies  abroad,  and 
even  in  France  itself. 

There  are  two  different  forms  of  commercial  co-operation, 
both  of  which  have  been  tried  with  success.  One  is  that  of  a 
universal  supply  store,  where  the  consumer  can  obtain  every- 
thing he  requires ;  the  other  form  is  a  specialized  store,  with 
a  trade  which  is  confined  to  some  one  branch,  such  as  dairy- 
ing, or  the  sale  of  wine,  &c.* 

*  Author's  Note.  The  statistics  of  the  Ministry  of  Labour  give  the 
following  figures,  which  show  how  the  consumers'  societies  in  France 
(1914<)    are   divided,   according  to   their   various   functions: — 

Various    retail   societies    (principally    grocers)         . . .     1,607 


Bakers 

Butchers 

Wine 

Beer 

Restaurants 

Coal 


1,300 
34 
48 
118 
18 
31 

3,156  2 


All  of  the  1,607  societies  classed  as  "various"  sell  groceries,  but 
600  add  bread,  whilst  100  of  them  sell  drapery,  hardware,  shoes,  con- 
fectionery, &c. 

The  societies  for  the  sale  of  wine  do  not  undertake  the  making  of 
it,  therefore  they  must  not  be  confused  with  the  societies  of  wine- 
growers for  the  manufacture  of  wine  or  for  the  sale  of  their  grape 
harvest.  The  co-operative  breweries,  on  the  contrary,  make  the  beer 
which  their  members  consume,  and  thus,  like  the  bakeries,  participate 
both  in  consumers'  and  producers'  co-operation. 

2  Figures  for  the  number  of  consumers'  societies  in  each  class  for 
the  United  States  are  not  available.  Certain  rough  estimates  can  per- 
haps be  given.  Figures  given  below  are  very  generous;  probably  they 
would  be  somewhat  smaller  in  each  case  if  the  precise  facts  were  known. 

Grocers  2,800 

Butcher    Shops ...         ...  25 

Bakeries  ...  75 

Restaurants  ...          ...         ...          ...          ...          ...  15 

Laundries  ...          ...           • .           ...         •  •  •           •  •  •  12 

Dry  goods,  Gents  F'shings,  etc 15 

Housing  ...          ...          ...         ...          ...          ...  25 

Milk   Supply  8 

To  be  sure  there  are  hundreds  of  grocery  stores  which  carry  a 
line  of  dry  goods,  shoes,  or  other  essentials,  and  other  hundreds  which 
carry  meats  and  fish. 


TYPES  OF  CONSUMERS'  SOCIETIES         121 

Up  to  the  present,  co-operative  evolution  tends  to  spread 
only  in  the  former  type;  this  is  only  to  be  expected,  as 
the  requirements  of  a  workman's  household  are  too  few  and 
the  time  at  his  disposal  for  making  purchases  is  too  limited 
for  the  members  of  it  to  roam  from  one  shop  to  another. 
But  this  state  of  things  might  be  altered  if  co-operation 
could  gain  headway  among  the  middle  classes.  For  example, 
in  several  large  towns  (London,  Milan,  &c.)  co-operative 
automobile  societies  have  been  formed  which  are  societies  of 
consumers,  and  not  of  producers,  that  is  to  say,  societies  to 
furnish  people  who  possess  motors  with  all  that  is  necessary 
for  their  upkeep,  i.  e.,  supplies  and  accessories.  In  many 
towns  in  the  United  States  there  are  also  co-operative  tele- 
phone societies.  In  fact,  among  all  the  varied  requirements 
of  man,  there  is  hardly  one  which  could  not  be  made  the 
object  of  a  special  consumers'  society.  We  cannot  mention 
them  all,  but  we  shall  name  a  few  of  the  most  important. 

(1)  Groceries 

Most  co-operative  societies  have  started  with  the  sale 
of  groceries,  after  the  example  of  the  Rochdale  Pioneers,  and 
even  today  it  is  to  this  type  of  trade  that  the  vast  majority 
of  co-operative  societies  adhere.  It  is  not  merely  because 
tliis  trade  satisfies  the  most  important  need  of  man,  but  sim- 
ply because  it  is  the  need  easiest  to  satisfy.     For  example : — 

1.  Goods  sold  under  the  head  of  groceries — which  com- 
prise not  only  foreign  produce  (coffee,  tea,  chocolate,  pepper, 
&c.),  but  also  jams,  sugar,  dried  vegetables,  confectionery, 
and  everything  required  for  the  household,  such  as  soap,  oil, 
&c. — comprise  almost  the  whole  of  the  daily  needs  of  the 

Also  there  are  many  hundreds  of  houses  that  are  co-operatively 
ov.-ncd;  but  the  majority  of  them  are  unincorporated  or  are  incor- 
porated under  the  straight  business  corporation  law.  Tliey  are  not 
projections  of  the  co-operative  idea,  but  are  co-operative  by  accident 
and  usually  not  strictly  co-operative  at  that. 


122     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

working  population,  bread  alone  excepted.     They  are  sold 
for  ready  money,  and  this  is  a  great  point. 

2.  They  do  not  need  any  skiUed  manipulation,  except,  per- 
haps, in  roasting  the  coffee  or  breaking  up  the  sugar. 

3.  They  are  easily  stored  and  preserved,  much  more  so 
than  are  meat,  fruit,  milk,  butter,  &c.,  and  involve  compara- 
tively little  wastage. 

4.  By  the  variety  of  articles  sold  they  insure  against 
variations  of  prices,  and  the  risks  of  goods  remaining  unsold. 

5.  They  only  need  a  very  small  capital  to  begin  with, 
although  the  trade  is  capable  of  being  developed  to  large 
proportions. 

6.  Finally,  since  it  is  in  this  department  that  goods  are 
most  often  adulterated,  it  is  not  a  difficult  matter  to  gain  a 
reputation  for  integrity. 

These  are  all  distinct  advantages  for  men  who  are  novices 
in  business,  as  are  most  co-operators. 

Furthermore,  the  best  proof  that  this  branch  of  trade  is 
the  most  accessible  of  all  is  that  of  all  trades  that  of  the 
grocer  is  the  commonest  in  every  country. 

Grocery  shops  are  to  be  seen  at  every  street  corner,  just 
because  this  is  the  venture  every  one  makes  who  has  neither 
the  capacity  nor  the  money  to  undertake  another  trade. 
Every  servant,  peasant,  workman,  discharged  soldier,  &c., 
who  wishes  to  settle  down  and  become  a  shopkeeper,  begins 
by  buying  a  small  stock  of  groceries,  at  least,  if  he  cannot 
manage  to  get  a  license  for  the  sale  of  drink.  It  is  none 
the  less  a  curious  fact  that  a  type  of  trade  which  is  every- 
where considered  the  most  commonplace,  and  which  has  al- 
ways been  a  butt  for  those  who  wish  to  ridicule  the 
middle-class  mentality,  is  the  very  trade  which  has  become 
the  nest,  as  it  were,  of  co-operation,  whence  this  blue  bird  has 
taken  its  flight. 

The  wine  trade  is  sometimes  the  special  object  of  a  co- 
operative society  (of  about  50  in  France,  not  counting  the 


TYPES  OF  CONSUMERS'  SOCIETIES         123 

co-operative  societies  for  the  production  or  sale  of  wine, 
which  are  quite  distinct),  but  as  a  rule  wine  is  included  in  the 
sale  of  groceries  and  constitutes  the  most  important  line  in 
many  stores,  especially  in  Paris.  An  unexpected  result  of 
this  has  been  that  during  the  wine  crisis  the  enormous  drop 
in  price  which  prevailed  in  France  from  1900  to  1910 
re-acted  very  considerably  on  the  co-operative  stores,  many 
of  which  had  to  close  in  consequence.  The  effect  of  a  fall  in 
prices  causes  an  appreciable  diminution  of  the  sale  receipts,  a 
relative  rise  in  general  expenses  and  a  reduction  of  the 
profits.  At  the  same  time  the  facilities  for  traders  to  offer 
good  wine  at  a  lower  price  increases  competition. 

(2)  Bakeries 

Next  to  a  grocery  store,  the  most  general  form  of  co- 
operative enterprise  is  a  bakery.  This  is  the  form  pre- 
ferred by  all  the  Belgian  and  by  more  than  a  quarter  of  the 
French  co-operative  societies  (1,300  out  of  a  total  of  3,156). 
A  bakery,  however,  is  a  more  complicated  business  than  a 
grocery  store,  in  that  it  is  an  enterprise  for  production, 
and  not  merely  for  sale.*  The  baker  not  only  sells  the  bread 
— ^he  makes  it.  Of  all  forms  of  production,  that  of  bread- 
making  is  the  oldest,  the  most  familiar,  and  it  is  still,  so  to 
speak,  a  domestic  enterprise.  It  needs  only  a  small  capital, 
employs  no  machinery,  and  operating  with  raw  material 
always  more  or  less  the  same,  the  price  of  which  varies  but 
little,  it  has  not  many  mishaps  to  encounter.  On  the  con- 
trary, it  has  many  advantages  superior  to  those  of  any  other 
branch  of  commerce.  It  supplies  a  food  of  daily  use  nec- 
essary to  human  life,  at  least  among  white  races,  which  has 

•  Author's  Note.  We  must  not,  however,  confuse  the  co-operative 
bakery  for  consumers  with  that  for  producers.  In  the  former  it  is 
the  people  who  eat  the  bread  who  get  it  made  for  themselves — as  in 
the  times  when  bread  was  made  in  the  home;  in  the  latter  it  is  the 
working  bakers  who  join  together  to  become  their  own  employers,  and 
to  sell  bread  to  the  public.    These  latter  societies  are  very  rare. 


124  ,  CONSUMERS'  CO-OPERATIVE  SOCIETIES 

a  large  place — sometimes  more  than  a  quarter — in  the  work- 
man's budget,  and  of  which  the  consumption  is  so  perfectly 
regulated  by  human  needs  that  it  hardly  varies  by  a  half- 
penny a  day.  One  knows  beforehand — which  cannot  be  said 
of  any  other  kind  of  merchandise — what  quantity  of  bread 
will  be  consumed  in  a  year  by  each  member  and  in  total.  And 
if  the  member  fails  for  a  single  day  to  purchase  at  the  shop 
his  disloyalty  is  at  once  apparent,  because  it  stands  to 
reason  that  he  has  not  gone  for  a  whole  day  without  eating 
bread.  This  is  one  of  the  principal  reasons  why  co-operative 
societies  in  Belgium  and  the  North  of  France  prefer  a  bak- 
ery ;  it  is  because  they  have  their  members  in  this  way  under 
their  thumb  and  under  their  eye.  When  they  notice  that 
a  member  has  not  bought  bread  for  some  days,  they  send 
round  to  his  house  to  enquire  the  reason  for  his  defection 
and,  if  necessary,  to  stimulate  his  zeal. 

Thus,  it  is  impossible  for  a  society  which  supplies  the  daily 
bread  not  to  take  an  important  place  in  the  members'  lives, 
and  to  create  a  solid  bond  between  them;  the  various  kinds 
of  bread  they  eat  form  a  sort  of  connecting  link  between 
them.  Besides,  in  the  event  of  a  strike  or  some  special  mis- 
fortune, the  distribution  of  bread  is  an  immediate  and 
efficacious  help.  On  the  other  hand,  precisely  because  bread- 
baking  is  the  most  ancient  form  of  production,  co-operation 
can  effect  considerable  reforms  in  it,  as  much  from  the  point 
of  view  of  production  as  of  distribution. 

We  give  instances  here  of  four  defects  which  ought  at 
all  costs  to  be  abolished  in  brea^-making,  but  which  are 
perpetuated  either  by  custom  or  sometimes  by  the  self- 
interest  of  the  consumer.  And  who  is  in  better  position 
to  educate  consumers  than  a  consumers'  co-operative  soci- 
ety? 

(a)  Hand-Jcneading. — Kneading  the  flour  by  hand  is  not 
only  fatiguing  for  the  workman  who  has  to  do  it  (hence  his 
name  "geindre,"  meaning  to  moan),  but  it  is  also,  as  far  as 


TYPES  OF  CONSUMERS'  SOCIETIES         125 

the  consumer  is  concerned,  a  disgusting  operation,  and  per- 
haps dangerous,  where  the  workman  is  affected  by  tuber- 
culosis or  other  disease,  if  the  heat  of  the  oven  does  not  per- 
meate the  dough  sufficiently  to  kill  all  the  germs.  Custom 
— that  of  the  bakers  themselves,  as  well  as  that  of  the  public 
— has  hitherto  been  opposed  to  tlie  employment  of  machin- 
ery, but  the  majority  of  large  co-operative  bakeries  have 
succeeded  in  introducing  it  and  accustoming  their  clientele 
to  its  use. 

(b)  Night  Work. — Bread  is  made  at  night.  Why? 
Simply  that  the  public  may  have  fresh  bread  for  their  break- 
fasts. But  night  work  is  very  exhausting,  particularly  when 
constant  and  performed  in  underground  bakehouses  and 
badly  ventilated  basements.  How  can  we  put  a  stop  to  these 
evils,  and  free  these  galley  slaves.'*  Simply  by  the  consumers 
being  content  to  eat  yesterday's  bread  for  breakfast,  which 
at  any  rate  they  could  always  use  in  the  form  of  toast.  It  is 
not  an  easy  matter  for  the  law  to  prohibit  night  work  in  an 
industry  which  is  more  or  less  a  domestic  one.  It  lies,  there- 
fore, with  the  public  to  liberate  these  workmen,  and  in  a 
large  number  of  societies  the  consumers  are  always  being 
educated  in  this  respect. 

(c)  Over-dressing  of  Flour. — In  order  to  have  the  flour 
very  white,  as  in  Paris,  it  is  "dressed"  to  60  per  cent. — 
even  to  55  per  cent. — which  means  that  nearly  half  of  the 
flour  is  thrown  away  with  the  bran,  which  is  an  enormous 
wastage.  Moreover,  this  very  white  bread,  though  more 
pleasant  to  the  palate  when  fresh,  is  hardly  eatable  when 
stale,  hence  another  wastage,  as  pieces  of  bread  left  over 
from  the  day  before  are  often  put  into  the  dustbin.  A  city 
workman  throws  away  stale  bread.  An  enormous  economy, 
which  would  run  into  millions  of  bushels  of  wheat,  and  hun- 
dreds of  millions  of  francs,*  would  be  to  restore  to  the  people 

•  Author's   Note.    French  people  consume  an  average  of  1  lb.  per 


126     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

(without  taking  us  back  to  the  black  bread  of  our  grand- 
parents) the  taste  for  bread  from  which  raw  material  has  not 
been  so  eliminated,  and  which  would  be  yellower,  of  more 
pleasing  flavour,  richer  in  nutritious  matter,  and  easier  to 
keep  in  eatable  condition. 

Co-operative  societies  have  tried  to  educate  the  public 
in  this  respect.  Perhaps  they  would  not  have  succeeded, 
so  strong  was  the  opposition,  had  not  the  war  come  to  teach 
the  lesson.  Leaving  Germany  out  of  the  question,  from  the 
month  of  May,  1916,  French  law  prohibited  the  dressing  of 
bread  below  77  per  cent.,  and  every  one  found  the  new  bread 
excellent.  In  Italy  the  law  has  imposed  a  dressing  of  85  per 
cent.,  which  makes  the  bread  quite  brown. 

(d)  UTi<ecessary  Producers  and  Retailers. — The  organiza- 
tion of  the  bread  trade  is  very  much  out  of  date  and  puts 
a  heavy  tax  on  consumers,  which  must  amount  to  hundreds 
of  millions.  If,  however,  modern  and  more  perfect  methods 
were  employed  in  baking  and  in  milling,  and  if  these  opera- 
tions were  undertaken  on  a  sufficiently  large  scale,  it  would 
be  possible  to  deliver  bread  almost  at  the  price  of  wheat,* 
weight  for  weight,  i.  e.,  about  2l/2d.  (price  of  wheat  before 
the  war).  It  was  sold  at  from  Sl/od,  to  4d.  per  kilo,'  which 
means  an  increase  from  40  to  60  per  cent,  on  the  price  of 
wheat.  When  we  consider  that  there  are  seven  milliards  of 
kilos  of  wheat  consumed  annually  in  France  we  can  calculate 

head  daily,  which  means  7  milliards  of  kilos  a  year.  These  7  milliards 
exact,  if  the  dressing  is  done  at  60  per  cent.,  117  millions  of  quintals 
of  wheat,  and  if  the  dressing  is  done  at  77  per  cent.,  only  90  millions, 
which  is  a  saving  of  27  million  quintals.  As  a  matter  of  fact,  the 
saving  is  probably  not  so  great,  as  the  flour  was  not  universally  dressed 
at  60  per  cent.,  but  even  if  the  saving  is  less  it  is  not  negligible.  (1 
quintal  =  1.968  cwt.) 

*  Author's  Note.  Wheat  loses  a  quarter  of  its  weight  in  the  grind- 
ing, but  this  is  regained  from  the  water  and  the  salt  necessary  to  make 
the  dough,  so  that  1  lb.  of  wheat  gives  1  lb.  of  bread.  As  to  the  ex- 
penses of  milling  and  bread-making,  they  are  so  insignificant  with  the 
modern  machinery  that  the  bran  and  the  offals  are  almost  enough  to 
cover  them. 

3  A  kilo  comes  to  about  2  lbs,  2  oz, 


TYPES  OF  CONSUIVIERS'  SOCIETIES         127 

how  large  a  sum  is  needlessly  squandered.*  And  let  us  remem- 
ber that  this  enormous  rise  in  the  price  of  bread  is  not 
connected  with  the  bakers*  profits  (these  are  generally  very 
much  diminished  owing  to  the  ridiculous  multiplicity  of  bak- 
ers, all  in  competition  with  one  another),  it  is  accounted 
for  by  the  increase  in  general  expenses  and  the  decrease  in 
demand  wliich  this  very  competition  means  to  each  producer. 
In  Paris  we  reckon  one  baker  per  every  1,300  persons;  in 
Lyons,  one  per  600 ;  and  in  St.  Etienne,  one  per  380.  Each 
baker  can  only  make  from  200  to  600  kilos  of  bread  daily. 
And  upon  that  he  must  find  means  to  live,  and  to  pay  the 
rent  for  his  shop  and  oven,  his  taxes,  his  workmen,  and  his 
delivery  men !  * 

How  comes  it  then  that  the  law  of  concentration  has  not 
been  effective  in  this  domain,  as  is  manifested  in  so  many 
others,  in  groceries  or  clothes,  for  instance?  It  is  not  very 
easy  to  find  an  explanation.  Probably  we  must  look  for  it 
in  the  neighbourly  relations  which  spring  up  between  the 
baker  and  his  customers,  in  the  custom  of  delivering  bread 
at  the  houses,  perhaps  also  in  the  custom  of  giving  credit. 
But  all  these  obstacles  are  not  insurmountable,  and  if 
capitalist  enterprise  has  been  unable  to  organize  bread  pro- 
duction on  a  large  scale,  co-operative  enterprises  has 
succeeded  in  doing  so. 

As  soon  as  a  co-operative  bakery  has  assumed  large 
enough  proportions  it  is  no  longer  content  to  buy  flour  for 

•  Author's  Note.  One  portion  of  the  French  rural  population  al- 
ready receive  the  benefits  which  might  accrue  to  them  by  co-operation, 
because  they  make  their  own  bread.  However,  these  people  are  gradu* 
ally  giving  up  home-baking,  for  even  the  peasants  now  buy  their 
bread  from  the  baker,  except  those  who  live  very  far  away  from  any 
village. 

*  Some  of  the  larger  cities  of  the  United  States  have  co-operative 
bakeries.  Always,  however,  thy  find  it  difficult  to  compete  with  the 
small  cellar  bakery  manned  by  the  owner,  an  apprentice,  and  several 
members  of  the  owner's  family.  The  Jewish  co-operative  bakeries, 
compelled  to  pay  high  union  wages  to  every  employ^  find  this  com- 
petition especially  trying. 


128     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

making  its  bread ;  it  buys  wheat  to  convert  into  flour,  i.  e., 
it  adds  a  mill  to  the  bakery,  thus  fulfilling  what  is  called  the 
law  of  integration  of  industry.  The  Rochdale  Pioneers  took 
over  a  small  mill  soon  after  starting,  but  this  premature 
venture  nearly  ruined  them. 

A  small  co-operative  bakery  could  hardly  sell  bread 
cheaper  than  the  baker,  it  could  only  add  to  the  weight  of 
the  loaf ;  but  when  the  co-operative  bakeries  have  thousands 
of  members  they  can  work  a  veritable  revolution  in  this 
primary  branch  of  commerce.  When,  as  in  the  co-operative 
bakeries  of  Glasgow,  Lille,  or  Roubaix,  they  are  able  to  sell 
from  20,000  to  40,000  kilos  of  bread  daily,  then  they  can, 
even  while  selling  the  bread  cheaper,  distribute  about  Id. 
dividend  per  kilo,  that  is  to  say,  bring  down  the  price  of 
bread  to  2%d.  instead  of  3^d.  (current  price  before  the 
war).  There  are  a  great  many  rural  bakeries  in  France 
(more  than  500)  owned  by  peasants  who  harvest  the  wheat 
and  transform  it  into  bread.  It  is  the  ancient  domestic  in- 
dustry of  bread-making  wliich  exists,  and  is  being  gradually 
transformed  under  this  collective  system,  which  comes  as 
much  into  the  field  of  production  as  into  that  of  consumption. 
Some  of  these  societies  own  a  mill  and  grind  the  wheat  into 
flour  themselves ;  the  maj  ority  deal  with  a  miller. 

(3)  Butchers'  Shops. 

Of  all  branches  of  commerce  it  seems  that  this  ought  to 
be  one  of  the  best  suited  for  co-operation,  because  the  prices 
of  meat  are  generally  very  high,  particularly  in  France, 
resulting  in  the  reduced  consumption  by  French  people, 
which  is  two-thirds  that  of  the  English  (50  kilos  a  year  in- 
stead of  70)  ;  moreover,  the  retail  price  seems  entirely  dis- 
proportionate to  the  price  given  for  the  animal,  particularly 
just  now  when,  consequent  on  the  war,  meat  is  excessively 
dear.* 

*  Author's   Note.    Vegetarians  say  that  this  is   a  good  and  not   an 


TYPES  OF  CONSUMERS'  SOCIETIES         129 

Nevertheless,  there  are  only  a  very  few  co-operative 
butcheries,  about  forty  in  France,  and  still  fewer  in  other 
countries.^  Of  all  forms  of  enterprise,  this  is  the  most  diffi- 
cult to  organize  co-operatively.  The  following  are  some  of 
the  reasons  for  this — we  need  only  mention  them  summarily, 
as  they  are  sufficiently  clear: — 

(a)  Because  meat  is  very  difficult  to  keep  and  of  irregvilar 
sale,  and  because  the  price  of  the  raw  material  (the  animal) 
is  extremely  variable,  which  often  exposes  the  retailer  to 
heavy  loss, 

(b)  Because  meat  is  the  commodity  which  least  lends  itself 
(by  reason  of  the  variety  in  quality  of  the  cuts — meat  is 
divided  into  10  or  12  different  categories — the  prices  of 
wliich  vary  enormously)  to  the  maintenance  of  the  equality 
which  should  naturally  exist  among  members  of  the  same  so- 
ciety ;  this  difference  in  quality  may  often  lead  to  discontent 
among  the  members. 

(c)  Because,  contrary  to  what  we  might  imagine,  the 
butchery  trade  pre-supposes  very  special  technical  capacity, 
as  much  for  the  buying  of  the  beast  as  for  the  manner  of 
retailing  the  various  portions — of  including  bone  or  fat,  of 
passing  them  from  one  category  to  another — and  in  this  last 
it  is  difficult  to  dispense  with  "the  master's  eye." 

evil,  and  that  it  is  better  not  to  increase  the  consumption  of  meat. 
We  cannot  discuss  this  question  here.  Vegetarianism  is  supported  by 
very  strong  arguments,  and  we  incline  to  the  belief  that  it  has  a  future; 
but  it  must  be  admitted  that  so  far  meat-eating  people  are  at  the  head 
of  the  industrial  movement. 

•'■'  There  are  more  than  this  in  the  United  States,  but  many  of  them 
are  run  in  conjunction  with  grocery  stores.  Usually  the  Jewish  people 
begin  with  bakeries  or  butcher  shops  rather  than  with  the  more  diffi- 
cult grocery.  However,  all  societies  find  the  butcher  shop  very  diffi- 
cult of  control  by  the  directors.  A  control  committee  knows  exactly 
how  much  to  expect  from  the  sale  of  the  product  of  k  given  number 
of  barrels  of  flour  in  the  bakery  and  it  can  foretell  to  a  nicety  the 
retail  value  of  the  contents  of  a  grocery  store;  but  even  the  skilled 
butcher  cannot  tell  how  much  to  expect  to  realize  from  the  carcase 
of  an  ox  or  sheep.  Therefore  the  directors  have  to  trust  to  the  honesty 
of  the  butcher  they  have  hired. 


130    CONSUMERS'  CO-OPERATIVE  SOCIETIES 

(d)  Because  a  wide  latitude  is  required  in  fixing  prices, 
&c.,  for  each  portion :  a  butcher  will  lower  the  prices  or  offer 
more  advantageous  terms  for  cuts  still  unsold  towards  the 
end  of  the  day.  These  are  liberties  which  a,n  owner  can 
take,  at  liis  will,  but  which  it  is  not  always  advisable  to  put 
into  the  hands  of  a  paid  manager. 

{e)  Finally,  because  the  butchers  have  an  arrangement 
among  themselves,  whereby  they  can  dispose  of  superfluous 
cuts,  when  there  is  no  sale  tor  them  among  their  customers — 
cheaper  cuts  to  such  a  one — and  choicer  cuts  to  another,  and 
so  on.  But  a  co-operative  butcher  would  not  have  this 
resource,  as  the  other  butchers  are  always  in  a  state  of  open 
or  tacit  coalition  against  him.  And  this  coalition  can  even 
make  the  purchase  of  an  animal  a  difficult  and  onerous 
business  for  him. 

However,  a  butchery  succeeds  best  when,  instead  of 
making  it  a  self-supporting  co-operative  enterprise,  it  is 
merely  a  separate  department  in  a  general  supply  store.  The 
general  expenses  are  thus  reduced  and  the  risks  are  covered 
by  the  combined  operations. 

For  meat  as  well  as  for  bread,  co-operative  shops  have 
rendered  an  important  service  by  the  sale  of  frozen  meat, 
which  the  agriculturists  in  France  had  succeeded  in  arrest- 
ing, by  prohibitive  taxes  and  under  vain  pretexts  of  hygiene. 
The  co-operative  stores,  however,  would  not  have  been  suc- 
cessful in  this,  had  not  the  war  and  consequent  lack  of  meat 
forced  the  Government  to  change  its  policy. 

But,  as  there  was  no  organization,  and  as  the  butchers 
showed  themselves  disinclined  to  facilitate  the  sale,  it  was 
the  co-operative  stores  which  took  up  the  matter  in  Paris, 
with  the  aid  of  the  municipality  of  Paris,  the  Department  of 
the  Seine,  and  the  State.  It  was  the  State,  or  rather  the 
military  authorities,  which  provided  the  meat  bought  in 
England.  It  was  the  town  and  the  Department  of  Paris 
which  provided  the  market  places   and  the  costs   of  their 


TYPES  OF  CONSUMERS'  SOCIETIES         131 

installation.  This  meat  could  only  be  sold  at  the  controlled 
price.  Today,  the  use  of  frozen  meat  has  become  general  in 
France,  and  it  may  be  said  that  tliis  beneficent  revolution  is 
solely  due  to  the  initiative  of  the  co-operative  societies. 

However,  it  is  difficult  to  control  the  price  of  meat  by 
governmental  action  (although  it  was  permitted  by  French 
law  even  before  the  war),  on  account  of  the  differences  in 
quality.  Municipal  butcheries  have  been  tried  in  small 
towns,  and  ^vith  success,  but  co-operative  ones  would  be 
preferable. 

(4)  Restaurants  and  Licensed  Cafes 

Why  should  not  a  consumers'  society,  instead  of  supply- 
ing raw  foods,  furnish  them  ready  prepared  for  consump- 
tion ?  There  is  no  doubt  that  this  can  be  done,  in  which  case 
the  society  becomes  no  longer  a  shop,  but  a  restaurant,  per- 
haps independent,  or  perhaps  simply  an  annex  of  the  grocery, 
of  the  butchery,  or  the  bakery.  But  such  co-operative  res- 
taurants are  still  very  rare;  there  are  only  about  fifteen  in 
France.  Many  of  such  restaurants  have  failed.  This  is, 
first  of  all,  because  their  clientMe  is  much  too  limited. 
Naturally  they  have  not  the  custom  of  any  of  their  members 
who  lead  a  family  life — and  these  are  the  most  numerous — or 
even  of  those  unmarried  ones  who  prefer  to  take  their  meals 
at  home.  And  on  the  other  hand,  they  cannot  count  on 
travellers,  like  ordinary  restaurants,  because  these,  who  by 
definition  are  only  casual  passers-by,  cannot  form  a  co-opera- 
tive society.  So  we  see  that  co-operative  restaurants  can 
only  supply  a  very  restricted  class,  such  as  students  going 
through  courses  of  study,*  workmen,  and  more  particularly 

•  Author's  Note.  Among  these  there  is  one  in  which  we  were  per- 
sonally Interested,  the  "Restaurant  Coofiratif  des  Etudiants,"  of  which 
we  gave  a  very  instructive  account  in  the  Revue  de  VEnseignement 
Swpirieur,  1905.  It  came  to  an  end  after  three  years  (1901-1901),  but 
was  started  again  in  a  very  unassuming  way,  substituting  a  fixed  price 
(Is.)    for  a  meal,  instead  of  service  h  la  carte.    The  success   of  the 


132     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

workgirls,  obliged  to  work  at  a  good  distance  from  their 
dwellings,  the  midmettes,  as  they  are  called  in  Paris.''  For 
these  last  such  restaurants  would  serve  a  useful  purpose. 
The  population  of  several  French  towns,  such  as  Bourges 
and  St.  Etienne,  was  about  doubled  during  the  war,  owing 
to  the  erection  of  huge  factories  with  thousands  of  workers. 
This  necessitated  the  building  of  large  workers'  restaurants. 
The  Minister  of  Munitions,  M.  Albert  Thomas — fortunately 
a  most  ardent  co-operator — gave  a  great  impetus  to  this 
movement.  The  State  furnished  the  necessary  capital,  and 
the  French  National  Federation  tmdertook  the  responsibility 
of  working  them.  There  were  119  restaurants  and  813  stores 
established,  which  were  managed  by  working  men  co-opera- 
tors, with  a  turnover  of  £3,640,000  during  the  first  quarter 
of  1918,  dixring  which  period  161  restaurants  and  320  shops 
were  opened  by  the  manufacturers  themselves,  but  whose 
total  businesses  scarcely  reached  £640,000.  Meanwhile, 
branches  have  sprung  up  all  round  Paris,  which  still  exist 
(1921). 

This  population  is  necessarily  somewhat  fluctuating  and 
irregular;  in  any  case,  it  changes  very  frequently,  and  is 
not  at  all  suitable  for  co-operative  association,  which  re- 
quires regularity  and  continuity.  Moreover,  the  legal  forms, 
with  share  subscriptions,  gradual  payments,  the  various 
responsibilities  and  consequent  formalities,  are  ill-suited  to  a 
floating  population.  Thus  in  this  case  it  seems  preferable  to 
employ  the  philanthropic  form,  i.  e.,  the  restaurant  founded 

new  restaurant  for  students  seemed  almost  assured,  but  unfortunately 
the  war  came  and  put  an  end  to  it. 

6  Many  of  the  American  cities  have  restaurants  organized  among 
the  single  men  of  a  given  community.  In  Brooklyn  such  a  society 
also  feeds  many  of  the  school  children  in  instances  where  both  parents 
are  at  work  all  day.  A  restaurant  like  this  often  provides  for  tlie 
needs  of  the  whole  family.  There  are  a  few  colleges  which  have  co- 
operative dining  haUs  among  the  students.  One  very  successful  cafe- 
teria society  is  looking  forward  to  the  time  when  it  can  establish 
delicatessen  departments. 


TYPES  OF  CONSUMERS'  SOCIETIES         133 

with  money  furnished  by  some  generous  capitalists ;  the 
goods  are  thus  deHvered  at  cost  price,  but  the  consumers 
do  not  acquire  the  rights,  nor  do  they  undertake  the  obliga- 
tions, of  members.  Such  is  the  co-operative  restaurant  at 
Grenoble  called  "Association  Aliment  aire" — founded  in  1851, 
the  oldest  and  most  prosperous  of  them  all.  It  is  co-opera- 
tive in  name  only,  because  it  serves  the  public  rather  than 
its  members.  To  become  a  member  an  entrance  fee  of  lOd. 
is  all  that  is  necessary.  The  only  right  which  membership 
confers  is  that  of  taking  part  in  the  general  meeting  and  in 
the  election  of  the  committee  of  management.  There  is  no 
distribution  of  dividends,  but  the  profits  are  placed  to  a 
reserve  fund,  which  is  drawn  upon  for  the  regulation  of 
prices.  This  fund  is  added  to  when,  owing  to  commodities 
being  cheaper,  the  restaurant  can  make  good  profits,  and  in 
like  manner  the  fund  is  resorted  to  when  business  is  carried  on 
at  a  loss,  owing  to  the  price  of  goods  being  high. 

It  is  quite  possible,  however,  that  the  co-operative  restau- 
rant is  destined  to  have  a  considerable  development,  both 
for  middle-class  housekeepers,  owing  to  the  increasing;  diffi- 
culty of  obtaining  servants,  and  for  working-class  house- 
holds, consequent  upon  the  distaste  for  cooking  which  their 
women  will  evince,  in  proportion  to  the  spread  of  the  feminist 
movement.  But  under  these  circumstances  the  co-operative 
restaurant  will  become  rather  an  annex  of  the  communal 
dwelling.  This  is  the  problem  that  arises  in  the  United 
States.  On  the  one  hand,  it  is  difficult  to  obtain  domestic 
servants  there,  and  they  demand  enormous  wages.  On  the 
other  hand,  American  women,  even  workgirls,  are  hardly  ever 
inclined  to  do  housework,  and  do  not  appear  to  have  much 
aptitude  for  it.  Under  these  conditions  there  is  hardly  any 
other  prospect  for  middle-class  households,  but  to  live  in 
hotels  or  as  bachelors  at  clubs,  and  for  workmen's  families 
to  buy  ready-cooked  food.  Here  we  are  on  the  road  which 
must  lead  us  sooner  or  later  to  the  realization  of  Fourier's 


134     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Phanlanstdre,  the  communal  household  taking  the  place  of 
the  family  dwelling. 

Co-operative  cafes  would  seem  to  offer  better  prospects  of 
success  than  restaurants,  in  so  far  as  that  their  clientele  is 
more  stable.  In  every  town,  more  particularly  in  small 
ones,  regular  customers  ("habitues")  are  always  to  be 
found.  Then,  too,  an  enormous  economy  would  be  realized, 
because  the  price  of  liquors  has  increased  in  formidable  pro- 
portions. But  notwithstanding  this,  co-operative  cafes  have 
had  even  less  success  than  co-operative  restaurants.  I  may 
say  I  do  not  know  of  a  single  example  in  France  of  a  genuine 
co-operative  cafe.  The  explanation  for  this  is  simply  that 
the  habitues  of  a  cafe  do  not  go  there  as  a  rule  either 
from  a  spirit  of  economy  or  to  serve  any  social  ideal. 

Attempts  have  been  made  to  establish  cafes,  or  wine  shops, 
which  would  be  both  co-operative  and  non-alcoholic.  But 
so-called  temperance  cafes  have  never  had  much  success  in 
France,  and  still  less  under  a  co-operative  form.  Up  to  the 
present  the  French  working-class — even  the  most  advanced 
— has  been  absolutely  indifferent  to  the  anti-alcohol  cam- 
paign. The  majority  of  co-operative  societies  sell  distilled 
liquor,  and  often  find  it  the  most  profitable  part  of  their 
trade.  {See  page  96,  "Division  of  Profits,")  Perhaps  this 
will  be  otherwise  after  the  war.  How  very  different  is  the 
attitude  of  the  Belgian  socialist  workmen,  who,  under  the 
inspiration  of  their  chiefs,  and  particularly  of  M.  Vander- 
velde,  have  banished  alcohol  from  all  their  co-operative  stores  ! 
And  it  is  noteworthy  that  in  France  it  was  only  among  the 
socialist  group  that  a  few  societies   followed  this  lead. 

We  should  mention  a  special  type  of  co-operative  re- 
freshment house  or  cafe  which  has  increased  very  much  for 
some  years  past,  and  has  caused  a  good  deal  of  discussion, 
even  in  the  Chamber  of  Deputies — we  mean  military  co-opera- 
tive cafes  or  canteens.  These  are  not  to  be  confounded  with 
the  large  officers'  clubs  (see  page  102),  but  are  small  clubs 


TYPES  OF  CONSUMERS'  SOCIETIES         135 

started  in  barracks  to  supply  soldiers  with  liquor  at  low 
rates,  and  with  games  and  various  kinds  of  recreation. 
Many  of  them  do  not  exact  any  subscription,  the  pre- 
liminary expenses  of  fittings  and  installation  being  paid, 
or  at  least  advanced,  out  of  the  regimental  funds.  Some 
of  them  demand  a  contribution  of  from  Id.  to  ly^jdi.  per 
month  for  each  member.  The  profits  realized  by  these 
clubs  are  devoted  to  movements  for  education,  for  provident 
funds,  or  for  '*works  of  solidarity,"  such  as  libraries,  benefit 
societies  for  soldiers'  families  deprived  of  their  means  of 
support,  travelling  expenses  for  soldiers  on  furlough  who 
wish  to  visit  their  homes,  or  even  a  superannuation  fund  for 
discharged  soldiers. 

These  military  co-operative  clubs  or  cafes  have  been  sub- 
jected to  many  attacks,  notably  from  "cantiniers,^'  who 
have  naturally  suffered  serious  loss  through  their  existence. 
And  formerly  some  commanding  officers  have  been  known  to 
lend  an  ear  to  their  complaints,  and  have  consequently  put  a 
stop  to  these  clubs,  or  at  least  have  hampered  their  opera- 
tions, as  for  example,  by  forbidding  them  to  sell  wine. 
Others  have  taken  the  pretext  of  some  abuse,  unfortunately 
only  too  frequent,  to  declare  that  these  clubs  only  serve 
as  a  cheap  means  of  getting  drunk  and  that  they  were  the 
cause  of  loss  of  time  to  the  officers  who  organized  them, 
who  had  something  better  to  do  than  to  become  retail 
dealers.  The  war  has  had  the  effect  of  giving  an  unexpected 
advertisement  to  the  military  co-operative  societies.  In  the 
French  army  there  was  one  for  each  division,  and  they  have 
been  so  useful  to  the  soldiers  that  they  were  able  to  do  with- 
out the  food  which  was  sent  by  their  families  each  week. 

Why  should  not  this  co-operative  system  extend  to  food? 
The  men's  canteens  and  the  officers'  mess  are  already,  in 
fact,  co-operative  food  suppliers.  It  would  only  mean  giv- 
ing them  a  better  form  of  organization,  and  having  them 
worked  by  the  people  interested  and  giving  them  the  partic- 


136     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

ipation  in  the  profits.  In  fact,  some  regiments  have  already 
begun  to  work  their  clubs  in  this  manner.  We  can  cite  the 
co-operative  societies  of  the  Republican  Guard  at  Paris, 
which  in  the  first  six  months  of  1907  had  repaid  the  £1,280 
initial  expenses,  distributed  £260  among  their  members,  and 
J>laced  £400  to  a  reserve  fund. 

(5)  Pharmacies 

In  Brussels,  in  Milan,  in  Geneva,  and  other  places  abroad 
there  are  co-operative  pharmacies  which  have  succeeded 
brilliantly,  which  is  easy  to  understand,  because  not  only 
do  they  sell  medicaments  at  half-price,  but  they  even  reim- 
burse to  their  members  more  than  half  'the  value  of  their 
purchases.  The  society  "Pharmacies  populaires"  (People's 
Pharmacies)  in  Brussels,  founded  in  1882,  sell  at  50  per  cent, 
below  current  price,  and  yet  their  profits  were  60  per  cent, 
in  1909  on  the  total  sales,  of  which  56  per  cent,  were  dis- 
tributed among  their  shareholders.  If  we  make  a  calculation 
we  find  that  this  represents  a  reduction  of  72  per  cent. 
These  Brussels  pharmacies  are,  in  fact,  mutual  pharmacies, 
since  all  their  shareholders  are  mutual  aid  societies,  but  they 
also  have  the  right  of  selling  to  the  public. 

We  must  admit  that  these  enormous  dividends  are  not 
due  merely  to  the  elimination  of  the  excessive  profits  which 
chemists  add  to  the  prices  of  medicine,  but  also  to  the 
fact  that  these  co-operative  pharmacies  sell  to  the  public  as 
well  as  to  their  members  and  distribute  the  dividends  solely 
to  their  members,  which  almost  doubles  each  member's  share. 
But  this  system  is,  we  are  aware  {see  page  74)  more  commer- 
cial than  co-operative. 

But  even  by  restricting  the  sales  to  members  only,  or  by 
distributing  dividends  only  on  their  own  purchases,  the  econ- 
omy effected  would  be  considerable  (from  about  30  per  cent. 
to  60  per  cent,  on  current  prices),  more  particularly  if 
worked  on  a  large  scale,  as  in  Brussels,  with  a  central  ware- 


TYPES  OF  CONSUMERS'  SOCIETIES         137 

house  for  the  manipulation  and  handling  of  drugs,  &c.  It  is 
clear  that  these  pharmacies  would  be  extremely  useful  to 
people  of  small  means,  when  they  find  themselves  under  the 
unfortunate  necessity  of  having  to  send  to  the  chemist. 
Moreover,  these  pharmacies  could  exercise  a  beneficent  in- 
fluence on  the  public  health,  by  giving  and  prescribing 
treatment  for  the  less  dangerous  maladies. 

This  form  of  co-operation  does  not  exist  in  France,  be- 
cause the  law  only  permits  certified  chemists  and  proprietors 
of  their  own  laboratories  to  sell  medicines.  It  only  excepts 
societies  for  mutual  aid,  which  may  sell  medicines  to  their 
members,  on  condition  that  their  manager  has  a  pharmaceu- 
tical diploma.  Thus,  the  great  society  at  Puteaux,  "La 
RevcTidicafion"  has  formed  a  mutual  aid  society  composed 
of  its  own  members.  A  monthly  deduction  of  5d.  per  mem- 
ber (5s.  a  year)  from  the  dividend  is  sufficient  to  start  the 
society  and  to  equip  the  pharmacy. 

The  creation  of  these  so-called  mutual  benefit  pharmacies, 
which  are  in  reality  co-operative,  has  given  rise  to  numerous 
law  suits,  the  chemists,  enraged  at  this  competition,  having 
attacked  the  societies  in  court,  as  being  contrary  to  law. 
Tlie  court  decided  in  favour  of  the  co-operative  pharmacies 
(notably  in  the  case  tried  before  the  court  of  the  Seine,  in 
re  the  "Revendication"  of  Puteaux). 

There  were  even  some  orders  and  some  general  administra- 
tive regulations  which  laid  it  down  that  the  exigencies  of  the 
law  only  apply  to  pharmacies  which  sell  to  the  public  and 
not  where  they  sell  only  to  those  who  have  created  them  for 
their  own  needs — co-operators  or  "mutualists,"  no  matter 
which.     But  the  law  is  not  absolutely  definite  in  this  matter. 

French  co-operative  societies  could,  it  is  true,  avoid  this 
difficulty  by  transforming  themselves  into  mutual  aid  socie- 
ties, but  this  would  only  present  fresh  difficulties,  such  as 
the  following:  (1)  In  every  case  the  laboratory  for  the  sale 
of  medicines  must  be  completely  separated  from  the  other 


138     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

shops;  (2)  the  capital  required  for  establishing  the  phar- 
macy (not  very  considerable,  £250  to  £300)  can  never  be 
acquired  in  the  form  of  shares,  as  in  this  case  the  society 
would  be  the  legal  proprietor  of  the  pharmacy,  and  the  law 
would  thus  be  contravened;  (3)  sales  to  the  public  would 
be  prohibited;  (4)  and,  finally,  if  there  are  any  profits,  they 
may  not  be  distributed  among  the  members,  but  must  go  into 
the  general  funds  of  the  society. 

It  is  only  very  flourishing  co-operative  societies  which  can 
open  branch  pharmacies,  because  it  has  been  generally  esti- 
mated that  about  2,500  is  the  minimimi  number  of  clients 
necessary  to  the  successful  existence  of  a  pharmacy.  But 
what  small  isolated  societies  are  unable  to  attempt  becomes 
quite  possible  if  these  societies  federate  in  large  co-operative 
unions,  such  as  those  of  which  we  shall  speak  presently. 
However,  as  the  majority  of  co-operators  in  France  are 
already,  or  will  become,  shareholders  in  mutual  insurance 
societies,  and  as  such  benefit  b}'  reduced  tariffs  at  the  ordi- 
nary chemists,  it  cannot  be  said  that  the  absence  of  co-op- 
erative pharmacies  is  a  great  loss  to  the  working  popula- 
tion. 

In  Britain,  co-operative  stores  have  not  these  difficulties, 
and  they  are  free  to  establish  a  branch  or  department  for 
pharmaceutical  as  well  as  any  other  class  of  goods,  but  only 
on  condition  of  having  a  qualified  chemist  at  the  head  of 
this  department.  There  are  only  very  few,  however,  which 
have  hitherto  availed  themselves  of  this  opportunity. 

(6)  Housing. 

We  have  said  many  tiroes  in  our  book — and  we  cannot  re- 
peat it  too  often — how  great  is  the  importance  of  housing, 
not  only  for  the  comfort  of  the  individual  and  his  family, 
but  also  from  the  point  of  view  of  hygiene  and  social  mo- 
rality, and  of  the  campaign  against  tuberculosis,  alcoholism, 
and  prostitution,  and,  on  the  other  hand,  how  very  difficult 


TYPES  OF  CONSUMERS'  SOCIETIES         139 

it  is  for  this  urgent  need  to  find  a  solution  under  present 
economic  conditions. 

Of  all  expenses,  that  of  housing  is  the  most  certain  to  in- 
crease; it  is  of  the  most  rapid  growth  and  the  most  dispro- 
portionate to  the  working  man's  budget. 

This  being  so,  why  does  not  co-operation  take  up  the  mat- 
ter of  providing  for  this  urgent  need,  as  well  as  for  others? 
In  fact,  it  has  not  failed  to  do  so,  either  in  the  form  of  a 
society  specially  constituted  with  the  aim  of  providing  this 
necessity,  called  a  co-operative  building  society,  or  by  includ- 
ing house  building  in  the  general  operations  of  a  distributive 
society.  In  this  case,  ihe  co-operative  store  will  have  a  house 
agency  department,  in  the  same  way  as  it  has  a  furniture  or 
a  hardware  department.^ 

(1)  Let  us  take  the  second  system  in  the  first  place.  For 
a  distributive  co-operative  society  to  be  able  to  add  to  its 
trade  the  letting,  &c.,  of  houses  it  must  have  attained  very 
largo  proportions  and  very  considerable  capital.  In  fact, 
to  build  houses,  and  particularly  to  be  able  to  build  enough 
to  meet  the  demands  of  its  members,  would  necessitate  very 
large  capital,  as  each  house  cost3  from  £200  to  £280. 
(Now  that  the  cost  of  building  has  nearly  trebled,  the 
problem  is  still  further  complicated.)  And  again,  the 
capital  sunk  in  this  real  property  can  only  be  re- 
turned very  slowly,  as  these  houses  may  be  sold  to  mem- 
bers who  can  only  pay  by  gradual  instalments  over  a  period 
of  from  15  to  25  years;  or  it  may  be  that  they  are  simply 
let,  in  which  case  the  society  must  deduct  from  the  rents  the 
necessary  premiums  towards  repayment  of  the  capital  ex- 
pended. But  if  a  distributive  society  has  a  large  capital, 
which  is  not  indispensable  to  its  trade,  then  house  building  is 
certainly  one  of  the  best  possible  uses  to  which  this  capital 
can  be  applied. 

T  The  few  housing  co-operatives  in  the  United  States  are  for  the 
most  part  organized  as  separate  societies. 


14iO     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

The  distributive  societies  in  Britain  have  already  reached 
this  stage ;  many  of  them  cannot  utilize  their  capital  to  its 
fullest  extent  in  their  trade,  in  fact,  so  much  is  this  so,  that 
several  of  thera  pay  it  out  to  their  members.  Indeed,  we 
have  already  said  (page  116)  that  of  the  capital  which  they 
have  acquired  only  about  half  is  necessary  to  their  trad- 
ing operations ;  this  leaves  about  £40,000,000,  at  their  dis- 
posal. However,  about  £8,000,000  only  have  been  spent 
on  buildings,  that  is  about  40,000  houses,  which,  if  they  were 
put  together  would  represent  quite  a  large  town.  (Paris 
has  less  than  100,000  houses.)  Only  about  one-third  of  the 
societies  do  any  house-building.  And  among  these  societies 
there  is  only  about  one-third  which  do  the  actual  building 
themselves.  The  others  confine  themselves  to  advancing 
the  money  for  their  members,  so  that  they  may  get  the 
building  done  themselves  at  their  convenience.  IMembers  find 
this  latter  method  more  convenient,  even  though  it  is  less 
economical.  But  British  co-operators  think  that  this  is 
not  enough,  and  they  intend  to  pursue  this  matter  further. 
One  society,  that  of  Woolwich,  near  London,  has  decided 
to  build  4,000  houses  for  itself,  at  the  rate  of  400  a  year, 
on  a  vast  property  which  it  has  bought,  and  this  colossal 
undertaking  is   already  well  under  way. 

In  France  there  are,  as  yet,  no  consumers'  societies  which 
build  houses  to  sell  to  their  members,  but  there  are  some 
(the  Famille  de  Saint-Denis)  which,  when  they  are  erect- 
ing premises  for  their  shops,  warehouses,  &c.,  have  flats 
built  on  the  upper  stories  which  they  let  to  their  mem- 
bers. y-^^'fiviA-^: 

(2)  Co-operative  building  societies,  i.  e.,  societies  formed 
specially  for  the  building  of  houses,  have  gone  much  further 
than  this ;  houses  built  by  them  may  be  reckoned  by  hundreds 
of  thousands  in  the  United  States  and  in  England,  and  in  a 
lesser  degree  in  Germany,  but  their  organization  is  very  much 
more  complicated  than  that  of  an  ordinary  consumers'  soci- 


TYPES  OF  CONSUMERS'  SOCIETIES         141 

ety.^  The  reason  for  this  is  very  easy  to  understand.  As 
tliesc  special  societies,  unlike  consumers'  societies,  cannot 
dip  into  the  reserves  of  a  capital  accumulated  for  other 
objects,  and  as  they  cannot  hope  to  obtain  the  capital  from 
their  members — ^because  if  the  members  had  sufficient  capital 
to  build  houses  for  themselves  they  would  never  dream  of 
promoting  a  society  for  that  purpose — they  are  obliged  to 
procure  capital  in  the  form  of  a  loan  from  the  public:  from 
the  savings  banks,  as  in  Belgium,  or  from  the  municipalities 
as  in  Germany.  Meanwhile  they  can  do  better;  they  can 
create  a  class  of  associates  who  will  join  the  society  simply 
to  invest  their  savings,  and  not  to  get  a  house  built,  and 
consequently  will  furnish  the  necessary  capital  for  supply- 
ing applicants  with  houses.  These  lenders,  however,  are 
really  members  and  not  merely  lenders  of  money:  in  fact, 
they  must  subscribe  for  shares,  and  it  is  just  the  successive 
Ipayments  which  they  have  to  make  in  order  to  pay  for  their 
shares  in  full  (generally,  the  fairly  high  sum  of  £200), 
which  make  them  members  and  which  have  the  advantage  of 
making  their  savings  regidar  and  obligatory.  Nevertheless, 
as  the  members'  contributions  will  only  be  fully  paid  after 
a  long  time,  it  becomes  essential  to  procure  capital  elsewhere, 
while  waiting,  in  order  to  be  able  to  provide  houses  immedi- 
ately for  those  who  demand  them.  This  is  why  building 
societies  are  obliged  to  have  recourse  to  the  savings  banks, 
or  directly  to  the  public.  The  members'  contributions  are 
then  used  merely  to  redeem  these  loans.  It  is  this  latter  sys- 
tem which  is  employed  in  England  and  the  United  States  in 
their  loan  and  building  societies,  which  have  given  wonderful 
results.  But  we  cannot  enter  into  details  of  these  diverse  or- 
ganizations, which  are  very  complicated.*     In  France  there 

8  See  Editor's  note  on  page  61  concerning  these  associations  in  the 
I'nited    States. 

•Author's  Note.  We  may  sum  up  as  follows:  the  societies  require 
contributions  from  their  members  in  the  form  of  share  subscriptions, 
calculated  so  as  to  represent  a   sum  equivalent  to  the  value  of  the 


142     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

were  in  1917  only  272  co-operative  building  societies,  not  in- 
cluding 164  philanthropic  or  semi-capitalist  ones.*  They 
procure  their  capital  fairly  easily  from  the  public,  as  they 
can  offer  the  land  and  the  houses  as  security.  They  would 
prefer  to  borrow  it  from  the  savings  banks,  or  from  the  Gov- 
ernment deposits  and  consignments  office,  because  they  would 
pay  a  smaller  interest ;  but  these,  though  authorized  by  law 
to  lend  the  money,  are  not  very  enthusiastic  in  the  matter. 

There  is  no  form  of  co-operation  which  has  been  so 
favourably  treated  by  the  legislature  in  France.  They  have 
encouraged  it  in  many  ways :  First  of  all  by  creating  public 
housing  offices,  which  should  exist  in  every  town,  but  which 
in  reality  exist  in  few.  Second,  later,  by  opening  the  public 
funds  to  these  societies,  savings  banks,  government  deposit 
and  consignment  offices,  even  those  of  the  asylums  and  hos- 
pitals. However,  the  trustees  of  these  funds  must  be  willing 
to  lend — but  as  a  matter  of  fact  they  seldom  do  lend. 

Thirdly,  the  State  grants  fairly  important  exemptions 
from  taxation  to  the  building  societies :  ground  rent,  doors 
and  window  tax,  registration  and  mortmain  tax. 

house,  but  payable  only  by  annual  payments  graduated  over  a  period 
of  15,  20  or  25  years.  The  payments  are  simply  credited  against  the 
cost  of  the  house  until  the  time  when,  the  full  amount  having  been 
paid  (i.e.,  all  the  shares  paid  up),  the  tenant  finds  himself  transformed 
into  the  owner.  These  delays  are  shortened  because  all  the  profits  of 
the  society  being  put  to  the  credit  of  the  members  increase  their  con- 
tributions and  hasten  the  "maturity"  of  the  shares,  in  the  picturesque 
language  of  the  Americans. 

One  of  the  most  ingenious  devices  in  these  American  building  socie- 
ties is  the  auctioning  of  the  houses  as  soon  as  they  are  built.  It  is 
the  highest  bidder  who  gets  the  property.  Some  people  will  say  that 
this  system  is  hardly  fair.  But  it  must  be  noted  that  the  excess  value 
paid  by  the  bidder  comes  into  the  common  fund,  swells  its  receipts 
by  so  much,  thereby  profiting  every  one,  even  the  dispossessed  ones, 
who   can   console   themselves   by   the    receipt   of   larger    dividends. 

*  Author's  Note.  There  are  many  more  in  Germany.  But  they  are 
meant  for  a  more  well-to-do  class  of  the  population,  as  the  average 
cost  rises  to  £72  per  house  instead  of  from  £40  to  £48,  as  in  France 
before  the  war.  In  Germany,  the  middle-class  is  very  well  catered 
for,  but  the  industrial  class  is  extremely  badly  housed. 


TYPES  OP  CONSUMERS'  SOCIETIES         143 

In  spite  of  all,  the  results  are  only  very  mediocre,  because 
in  1913  the  grounds  laid  out  and  buildings  raised  by  the  co- 
operative societies  only  represented  £1,320,000,  which — at 
the  rate  of  £240  per  house  or  flat  (land  included) — would 
only  mean  the  housing  of  5,000  families.  It  is  true,  as  M. 
Cheysson  remarked  in  his  annual  report  on  the  Cheap  Hous- 
ing Societies,  that  these  expenses  do  not  include  those  for 
houses  already  disposed  of  and  paid  for,  nor  those  incurred 
by  societies  which  were  dissolved  after  having  concluded  their 
work.  Nevertheless,  even  if  these  figures  are  doubled  they 
are  not  sufficient  for  present  needs.  The  results  obtained 
by  philanthropic  building  societies,  and  especially  by  em- 
ployers for  their  workmen  in  their  factories,  are  very  much 
higher.® 

Whether  it  concerns  consumers'  societies  which  have  un- 
dertaken the  building  of  houses,  or  special  building  societies, 
the  question  arises :  Is  it  better  to  sell  the  houses,  or  merel}' 
to  let  them? 

For  a  long  time  the  first  method  was  the  one  taught  and 
practised  without  discussion ;  it  was  believed  that  the  owning 
of  a  house  had  a  good  effect  on  a  workman;  that,  at  any 
rate,  it  constituted  for  him,  on  account  of  the  gradual  pay- 
ments exacted,  a  method  of  investment  and  of  compulsory 
thrift  superior  to  any  other.  Even  to-day  nearly  every 
building  society  practises  this  system.  But  the  consumers' 
societies  which  do  building  tend  rather  to  prefer  the  second 
solution,  i.  c.,  to  keep  the  ownership  of  their  houses  them- 
selves for  the  following  reasons : — 

(1)  To  preserve  the  right  of  control  over  these  dwellings 

0  Building  has  been  almost  at  a  standstill  for  several  years  in  the 
United  States.  Even  special  laws  by  several  states  exempting  new 
buildings  from  taxation  have  not  succeeded  in  accelerating  the  industry. 
Excessive  building  costs  added  to  widespread  evidence  of  grossest 
kinds  of  graft  on  the  part  of  building  contractors  and  dealers  in  build- 
ing materials — these  have  discouraged  private  enterprise.  Co-opera- 
tors, faced  with  the  same  handicaps,  and  inexperienced  in  this  form  of 
activity,  have  not  yet  become  aroused  to  the  possibilities  before  them. 


144.     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

in  order  to  keep  them  in  good  hygienic  condition,  and  thus 
to  avoid  the  abuses  which  too  often  occur  when  the  workman, 
having  become  proprietor  of  his  house,  degrades  it,  intro- 
duces lodgers,  or  sub-lets  it — exploiting  perhaps  his  own 
comrades  thereby,  as  he  was  formerly  exploited — or  re-sells 
it,  perhaps,  to  a  keeper  of  a  tavern ! 

(2)  To  keep  for  themselves  the  enormous  increases  in  value 
of  houses,  and  also  of  land  for  building,  in  all  growing  towns 
— increases  have  been  the  source  of  colossal  fortunes.  These 
enormous  increases  in  value  are  very  difficult  to  justify 
on  the  grounds  of  justice,  as  they  are  due  purely  to  social 
causes — explained  by  the  terrible  term  of  the  economists, 
unearned  increments.  Henceforth  these  houses  would  no 
longer  be  swallowed  up  in  individual  ownership,  but  would 
remain  the  collective  property  of  the  society.  If  this  system 
were  to  become  general  we  might  tliereby  have  an  economic 
revolution  in  urban  property. 

(3)  To  allow  workmen  more  independence,  because  to  be 
the  owner  of  a  house  may  become  somewhat  irksome  to  a 
workman.  It  is  a  good  thing,  not  only  in  the  workman's 
interest,  but  also  to  prevent  the  general  depression  of  wages, 
that  labour  should  be  mobile  and  able  to  move  freely  to  wher- 
ever there  is  the  greatest  demand  for  it.  I  must  add,  how- 
ever, that  societies  which  make  a  workman  a  house-owner 
have  also  discovered  ingenious  methods  whereby  he  may  re- 
tire from  his  ownership  should  he  so  desire. 

In  England,  in  addition  to  consumers'  societies  for  supply- 
ing houses,  there  have  been  formed  associations  of  tenants 
called  Tenant  Co-partnership  Societies,  which  aim  merely 
at  providing  comfortable  and  cheap  houses,  but  which  differ 
from  ordinary  building  societies  in  that  their  members  do 
not  desire  proprietorship  of  the  houses.  Although  they  are 
of  very  recent  date,  there  are  today  about  fifty  societies 
which  have  built  more  than  10,000  houses,  valued  at 
£1,800,000,  grouped  in  charming  little  villages,  generally 


TYPES  OF  CONSUMERS'  SOCIETIES         14*5 

near  large  towns.  They  are,  however,  indirectly  house- 
owners,  being  shareholders  in  the  society  which  owns 
the  houses.  But  they  have  at  the  same  time  security 
of  tenure,  as  they  cannot  be  turned  out,  nor  can  their 
rent  be  raised  as  long  as  they  pay  it  regularly;  they 
are  also  free  to  leave  when  they  like,  whether  they  give  up  or 
retain  their  shares. 

Tenant  societies  are  generally  found  outside  large  towns, 
in  order  to  gain  more  air  and  space,  and  in  order  that  each 
house  and  the  entire  colony  may  be  surrounded  with  trees 
and  foliage ;  therefore,  they  are  called  garden  cities.*  Their 
aim  and  ambition  is  to  start  an  entirely  new  era  in  the  evolu- 
tion of  house-building.  The  views  of  the  advocates  of  gar- 
den cities  may  be  simimed  up  as  follows: — 

Existing  towns  which  have  grown  and  expanded  under  the 
pressure  of  causes  purely  historical,  political,  and  econom- 
ical, must  always  remain  under  defective  conditions  from 

*  Author's  Note.  The  word  "garden  city"  having  become  the  fashion 
it  is  used  even  where  it  has  no  proper  significance,  as,  for  instance, 
where  there  are  a  certain  number  of  cheap  houses  grouped  by  a  build- 
ing society  round  a  mine  or  a  factory.  This  word  should  really  only 
be  used  where  there  is  a  "city,"  with  all  that  is  implied  thereby: 
economic  life,  social  life,  civic  life,  &c.  Up  to  the  present  there  is 
only  one  which  has  the  right  to  the  title  of  garden  city,  the  small  town 
created  in  1901,  near  Letchworth,  not  far  from  Cambridge.  This  little 
town,  built  by  a  society  hoping  to  realize  the  program  of  Howard's 
book,  "To-morrow,"  has  from  8,000  to  10,000  inhabitants.  It  is  not, 
.properly  speaking,  co-operative,  as  it  is  open  to  any  one  who  wishes 
to  come  and  live  there,  and  not  only  to  members  of  the  society;  but 
it  contains  various  independent  co-operative  associations,  for  building, 
for  consumption,  and  also  a  tenants'  co-partnership  society.  If  all  the 
members  of  this  town  were  members  of  these  associations  for  distribu- 
tion and  for  housing,  &c.,  which  exist  in  it,  Fourier's  Phalanathre  would 
be  very  nearly  realized.  Another  garden  city  has  just  been  formed 
(1918)    at  Welwyn. 

The  small  town  of  Milanino,  founded  in  1909,  in  the  outskirts  of 
Milan,  by  the  large  Co-operative  Society  of  Milan,  or,  rather,  by  its 
director,  Buffoli  (now  deceased),  is  also  a  remarkable  example  of  a 
garden  city — or,  at  least,  of  a  society  of  tenants'  co-partnership.  The 
houses  there  are  not  exclusively  reserved  for  members,  but  members 
have  the  right  of  preference,  and  have  the  sole  right  to  the  profits, 
which  are  very  small  up  to  the  present  (1.75  per  cent,  in  1915). 


14^6     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

the  hygienic  and  aesthetic  point  of  view.  Moreover,  all  the 
rent  value  of  the  land  profits  individual  proprietors  only 
and  becomes  a  source  of  colossal  and  most  unjustifiable 
fortunes.  Every  effort  which  is  made  by  co-operative  asso- 
ciation and  otherwise  to  change  this  state  of  things  will 
inevitably  be  fruitless,  as  long  as  the  house  is  in  surroundings 
which  must  have  a  vitiating  effect  upon  it.  The  only  solu- 
tion, therefore,  is  to  go  out  of  the  towns  and  build  new  cities 
outside  them  in  the  country,  on  a  rational  plan.  The  land 
and  the  house  will  be  the  property  of  the  co-operative  asso- 
ciation, or  of  the  commune,  here  one  and  the  same  thing. 
Here  again,  the  war  will  have  served  to  popularize  the  idea 
of  garden  cities.  The  sad  necessity  of  rebuilding  towns 
I — several  partly,  at  least,  in  France  and  Belgium,  and  3000 
entire  villages — has  naturally  evoked  new  plans  of  organiza- 
tion in  which  hygienic  and  aesthetic  considerations  will  hap- 
pily have  a  large  place.  In  May,  1916,  in  spite  of  the  war, 
there  was  a  Model  City  Exhibition  opened  in  Paris  to  popu- 
larize the  teaching  of  this  new  science,  town-planning.  The 
teaching  of  "urbandsm"  has  just  been  started  by  the  city  of 
Paris.  There  are  not  yet  any  garden  cities  in  France. 
There  is,  however,  a  co-operative  housing  society  called 
"Jardin  Paris." 

(7)  Societies  for  Intellectual  and  Recreation  Purposes. 

By  this  heading  we  mean  co-operative  societies  whose  aim 
is  not  the  supplying  of  material,  but  of  intellectual,  spiritual, 
and  artistic  needs.  We  might  have  co-operative  universities, 
co-operative  journals,  co-operative  theatres,  co-operative 
churches  (these  we  have  already  where  the  separation  of 
Church  and  State  is  effected),  and  co-operative  cafes  (we 
have  these,  particulary  in  our  clubs  and  casinos).  It  is  note- 
worthy that  these  several  requirements  are  precisely  those 
best  suited  for  co-operation,  because  though  a  man  may  be 
able  to  work,  buy,  or  consume  individually,  it  is   a  very 


TYPES  OF  CONSUMERS'  SOCIETIES         14.7 

different  matter  when  it  comes  to  educating,  improving  him- 
self, or  amusing  himself  alone.  It  is  not  particularly  enter- 
taining to  play  solitaire  or  patience  for  any  length  of  time ! 
However,  these  intellectual  co-operative  societies  are  only 
"desiderata"  up  to  the  present  time. 

In  a  large  number  of  universities  in  the  United  States 
there  are,  among  the  students,  co-operative  societies  for  the 
sale  of  all  the  requirements  of  students,  but  chiefly  for  books 
and  stationery.  The  Harv^ard  University  society  had  a 
turnover  of  £80,000  not  long  ago.^°  There  has  been  a  sug- 
gestion of  introducing  this  practice  into  France,  with 
the  addition  of  the  printing  of  theses — which  is  a  heavy 
expense  for  students — but  nothing  has,  as  yet,  been  at- 
tempted in  this  direction.  Even  co-operative  societies  for 
the  sale  of  text-books  and  so  on,  among  teachers  and  among 
Protestant  pastors,  are  only,  as  yet,  projects.  A  society 
of  readers  might  also  be  formed,  not  to  buy  books,  but  to 
borrow  them  in  rotation  for  reading,  which  is  also  a  form 
of  consumers'  co-operation. 

From  time  to  time  the  question  arises  of  co-operative  news- 
papers, but  this  may  be  taken  in  two  different  senses.  We 
do  not  mean  by  this  the  newspapers  published  by  large  co- 
operative societies  or  co-operative  unions,  which  exist  every- 
where, and  some  of  which  have  a  circulation  which  might  be 
envied  by  big  political  journals.  {See  page  97.)  It 
may  be  a  society  for  subscribers  who  join  together  to  have 
a  newspaper  they  like,  or  it  may  be  a  co-operative  society  of 
writers  who  combine  to  get  the  profits.     In  the  first  case  it  is 

10  Such  societies,  however,  have  not  been  of  much  value  to  the  move- 
ment generally.  Most  of  these  societies  entirely  neglect  educational 
work,  the  students  take  almost  no  part  in  the  management  of  the 
societies,  and  the  average  boy  or  girl  in  many  of  the  universities  of 
the  country  where  such  societies  exist  passes  through  his  four  years 
of  experience  knowing  the  "co-op"  as  nothing  more  than  a  commercial 
establishment  which  rebates  to  its  patrons  each  year  a  part  of  its 
profits.  This  is  the  writer's  experience  with  one  of  the  largest  of 
these  university  societies. 


148     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

a  society  of  consumers,  in  the  second  it  is  an  association  for 
production.  Some  attempts  have  already  been  made  under 
the  second  form  (notably  with  the  Mercure  de  France), 
but  none,  as  yet,  under  the  first  form ;  this  is,  in  fact,  much 
more  difficult  to  realize. 

The  same  may  be  said  of  the  co-operative  theatre,  which 
has  already  been  essayed  under  the  form  of  co-operative  pro- 
duction (the  Comedie  Fran^aise  is  an  association  for  co- 
operative production,  the  oldest  of  them  all),  but  nothing  in 
this  way  has  been  attempted  under  the  form  of  consumers' 
co-operation.  However,  as  soon  as  enough  subscribers  can 
be  found  among  the  audience,  these  subscribers  have  but  one 
step  further  to  go  in  order  to  become  co-operators.^^ 

One  very  interesting  form  of  co-operation  of  the  same 
kind — recreative,  if  not  exactly  intellectual — is  that  for  pro- 
viding a  holiday  in  the  country,  or  what  the  English  call 
"co-operative  holidays."  This  aims  at  procuring  for  people 
who  could  not  otherwise  afford  it  the  means  of  passing  some 
days  of  vacation  in  the  country  or  at  the  seaside.  With  this 
object,  houses  are  rented,  or  even  built  in  suitable  situations 
and  the  expenses  of  board  and  travelling  are  fixed  at  cost 
price.  To  be  accurate,  these  efforts,  as  they  are  worked  at 
present,  are  really  more  philanthropic  ventures  than  genuine 
co-operative  movements ;  the  initiative  and  the  direction  do 
not  come  from  those  most  to  be  benefited.  But  there  is  no 
reason  why  they  should  not  develop  on  more  strictly  co- 
operative lines,  or  they  might  be  attached  to  some  co-oper- 
ative consumers'  society  from  henceforward.  The  English 
Association  has  already  thirteen  holiday  resorts  in  England, 
Scotland,  Germany,  Switzerland,  and  France,  some  of  which 

11  We  have  referred  in  a  previous  note  to  co-operative  moving  picture 
theatres  in  the   United   States. 

In  Greater  New  York  the  three  co-operative  evening  schools  are 
organized,  financed,  and  controlled  by  the  adolescent  and  adult  students. 
These  boys  and  girls,  men  and  women,  hire  their  own  teachers,  rent 
their  own   class-rooms,   and   publish  their   own  little   periodicals. 


TYPES  OF  CONSUMERS'  SOCIETIES         149 

are  magnificently  fitted  up,  where  visitors  are  received,  on 
terms  somewhat  variable,  but  always  very  moderate. 

We  might  point  to  analogous  works  in  France.  There 
are  five  vacation  places  organized,  at  the  seaside  or  in  the 
mountains. 

Co-operative  holidays  are  obviously  only  possible  for  those 
persons  who  can  get  some  days'  vacation.  But  if  the 
majority  of  clerks  enjoy  this  permission  there  are  still  very 
few  workmen  who  can  claim  tlie  privilege,  although  certainly 
no  social  class  has  more  need  of  it.  However,  it  is  certain 
that  this  demand  will  soon  be  enforced,  as  well  as  that  for 
the  weekly  half-holiday. 

Cercles  (clubs)  may  be  considered  as  co-operative  associa- 
tions, in  the  sense  that  the  members  are  also  beneficiaries; 
but  as  these  clubs  are  worked  on  contributions,  not  shares, 
they  come  rather  under  the  category  of  mutual  aid.  It  is  a 
general  rule  among  the  societies  affiliated  to  the  National 
Co-operative  Federation  that  each  co-operative  society  has 
its  club  attached  to  the  store,  with  dining  rooms  (non- 
alcoholic liquors  if  possible),  rooms  for  games  (not  for 
money  stakes),  rooms  for  reading  and  discussion,  &c.  This 
is  a  method  of  establishing  daily  intercourse  among  the  mem- 
bers ;  this  intercourse  induces  closer  and  more  cordial  rela- 
tions than  any  which  might  result  from  the  annual  or  half- 
yearly  general  meetings,  and,  above  all,  keeps  alive  a  certain 
social  ideal. 

(8)  Co-operative  Iiuura/n<ce. 

There  is  one  need  which,  while  not  belonging  to  a  mate- 
rial order,  such  as  food  and  lodging,  is  none  the  less  press- 
ing; it  is  that  of  insurance.  Of  course  it  is  not  in  our 
power  to  guarantee  against  the  risks  of  life,  but  it  is  at 
least  possible  to  make  good  their  pecuniary  consequences,  by 
means  of  insurance.  We  know  that  this  marvellous  institu- 
tion consists  in  consolidating  the  largest  number  of  persons 


150     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

possible  in  the  expectation  of  a  certain  risk  in  such  a  way 
that  when  it  strikes  one  of  them  the  blow  so  infinitely  di- 
vided will  only  inflict  very  slight  injury  to  each  individual. 

Every  insurance  enterprise  is  thus  co-operative  in  the  lar- 
ger sense  of  the  word.  Nevertheless,  the  word  is  not  used 
when  the  insurance  is  organized  as  a  capitalist  enterprise,  as 
companies  with  f.xed  premiums  as  they  are  called,  because 
the  shareholders  have  no  dealings  whatsoever  with  the  in- 
sured, except  to  draw  enormous  dividends  at  their  expense. 
Neither  must  we  confuse  mutual  with  co-operative  insur- 
ance. The  first  is  formed  without  capital,  makes  no  profits, 
receives  nothing  but  contributions,  and  can  only  indemnify 
risks  up  to  the  limits  of  these  contributions.  The  second 
is  formed  with  a  social  capital,  makes  profits,  and  under- 
takes to  pay  stipulated  indemnities  in  full.  The  co-opera- 
tive insurance  company  bears  much  more  resemblance  to  an 
ordinary  insurance  company  with  fixed  premiums,  with  the 
essential  difference  that  the  profits,  instead  of  being  distrib- 
uted among  the  shareholders  dn  proportion  to  their  shares, 
are  divided  among  the  insured  co-operators,  in  proportion 
to  the  premiums  paid  by  them.*  ^^ 

The  genuinely  co-operative  insurance  societies  are  very 
rare,  doubtless  on  account  of  the  great  difficulty  they  would 
meet  with  in  collecting  the  large  capital  which  is  indispen- 
sable to  their  functions ;  and  where  there  is  no  such  cap- 

*  Author's  Note.  There  are  still  some  insurance  companies  which 
resemble  the  co-operative  system,  inasmuch  as  they  give  their  clients  a 
part  of  the  profits,  which  may  go  towards  reducing  their  premium. 

12  The  excellent  insurance  plan  of  the  Jewish  Workmen's  Circle  is 
on  the  mutual  benefit  model.  The  United  States  does  not  yet  have 
any  co-operative  insurance  against  sickness,  accident,  or  death  organ- 
ized on   the  Rochdale  plan. 

Among  the  farmers  of  certain  parts  of  the  country,  however,  there 
are  insurance  companies  for  the  protection  of  investment  in  buildings 
and  other  property;  insurance  against  fire,  lightning,  hail,  windstorm, 
etc.  Some  of  the  best  known  of  these,  among  the  Jewish  farmers, 
instead  of  rebating  surplus-savings  directly  to  the  members,  deduct 
such  savings  from  the  assessment  levied  the  following  year. 


TYPES  OF  CONSUMERS'  SOCIETIES         151 

ital  we  must  fall  back  on  mutual  insurance.  It  is  true  that 
in  France  several  of  the  largest  insurance  societies  at  fixed 
premiums  began  with  a  purely  guaranteed  capital,  that  is 
to  say  the  full  payment  of  the  shares  has  never  been  de- 
manded. But  even  under  this  form  of  guaranteed  capital, 
though  the  money  need  not  be  paid  up,  there  is  still  a  pecuni- 
ary responsibility  to  be  assumed  which  is  sufficient  to  scare 
away  any  subscribers  from  among  the  working  classes. 

But  why  should  we  create  special  co-operative  insurance 
associations?  Would  it  not  be  much  simpler  if  the  con- 
sumers* societies  would  add  this  service  to  those  which  they 
already  exercise?  We  know  that  when  these  societies  reach 
a  certain  point  they  have  superfluous  capital  at  their  dis- 
posal ;  well,  then,  a  co-operative  insurance  service  would  be  a 
very  profitable  outlet  for  these  reserve  funds.  In  England, 
the  Co-operative  Insurance  Society  was  founded  in  1867.  It 
insures  against  fire,  accident,  dishonesty  of  employes,  and 
the  breaking  of  windows,  and,  above  all,  does  a  life  insurance 
business  for  more  than  1,100,000  co-operators,  and  receives 
£312,000  in  premiums.  It  is  the  consumers'  co-operative 
societies  which  have  supplied  nearly  all  the  capital  (at  least 
5  shares  of  £1  for  each  affiliated  society,  of  which  only  £1  is 
paid  up),  and  which  constitute  the  whole  of  its  clientele. 
But  this  joint-stock  company  is  undoubtedly  destined  to  be 
soon  absorbed  by  the  English  Wholesale  Society,  which 
opened  an  insurance  department  in  1913,^'  which  will  prob- 
ably grow  as  quickly  as  their  bank.  They  might  go  much 
further.  It  is  reckoned  that  the  working-class  in  England 
pays  annually  £20,000,000  in  insurance  policies,  and  we  ask 
why  should  this  enormous  sum  not  be  paid  into  co-operative 
societies?  The  profits,  instead  of  enriching  various  share- 
holders, would  be  given  back  to  the  people  insured. 

13  The  Co-operative  Insurance  Society  was  taken  over  by  the  Eng- 
lish and  Scottish  Wholesale  Society  in  1913. 


152     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

This  brings  us  to  the  end  of  our  review  of  the  various  forms 
of  consumers'  societies.  We  leave  on  one  side  two  classes  of 
co-operative  societies  which  are,  nevertheless,  closely  related 
— societies  for  the  purchase  of  raw  materials  and  implements, 
and  the  credit  societies  and  rural  banks.  Both  these  types 
are  very  numerous  in  agriculture,  but  they  are  still  very 
rare  in  industry.  Both  kinds  of  society  provide  the  supply 
of  very  urgent  requirements,  and  by  the  same  means,  i.  e.,  by 
association  of  those  interested;  but  here  we  get  into  the 
domain  of  production  rather  than  of  consumption.  Ferti- 
lizers and  seeds  purchased  by  agricultural  syndicates,  and 
capital  loaned  by  rural  banks,  have  clearly  no  other  object 
than  to  serve  agricultural  production.  Therefore,  these 
special  types  should  be  studied  in  a  treatise  on  co-operative 
production.^* 

14  In  many  of  the  larger  cities  in  the  United  States  and  even  in 
some  of  the  towns,  retail  merchants  are  organized  for  collective  buy- 
ing. This,  too,  is  producers'  co-operation.  We  also  have  credit  unions 
organized  among  small  business  men. 


CHAPTER     XI 
CO-OPERATIVE       FEDERATIONS 

As  soon  as  co-operative  movement  in  any  country  has 
reached  a  certain  stage  of  development  the  co-operative 
societies  begin  to  fonn  federations,  as  do  other  tj'pes  of  as- 
sociations, such  as  mutual  aid  societies  and  trade  unions. 

There  are  two  aspects  of  these  federations,  one  social 
and  the  other  commercial ;  one  to  develop  the  spirit  of 
solidarity  among  the  societies  and  to  guide  the  co-operative 
movement;  the  other  to  bulk  purchases,  and,  if  possible, 
organize  production ;  and  though  these  two  aspects  can  be 
united  in  one  organization  (as  in  Switzerland  and  some  other 
countries)  the  work  is  better  divided  if  they  remain  distinct, 
like  two  houses  in  a  parliamentary  government.  In  any  case, 
it  is  better  to  consider  them  separately.  In  France,  the  Co- 
operative Federation  and  the  Wholesale  Society  are  two 
distinct  organizations  with  separate  offices,  and  even  distinct 
committees,  but  it  is  significant  that  the  two  committees  are 
formed  of  the  same  persons. 

Section  1. — Co-operative  Unions 

These,  as  we  have  said,  are  formed  with  the  sole  object 
of  developing  the  spirit  of  solidarity  among  the  societies,  of 
making  them  conscious  of  their  place  and  their  power;  to 
get  from  them  and  to  furnish  to  them  statistical,  legal,  and 
economic  information,  to  call  periodical  congresses,  to  pub- 
lish periodicals  and  books,  to  organize  all  forms  of  propa- 
ganda, and,  if  possible,  programs  of  common  action,  to  di- 
vide into  districts  and  quarters  the  area  of  each  society  so 

153 


154     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

as  to  avoid  overlapping,  and  its  resultant  competition — in  a 
word  to  exercise  the  functions  of  a  government  whose  au- 
thority, it  is  needless  to  say,  is  purely  moral. 

Their  function  is  very  important,  at  least  where 
co-operators  are  well  organized  and  disciplined,  and  are  not 
divided  by  bitter  political  and  religious  feuds.  The  services 
which  the  Co-operative  Union  at  Manchester  has  rendered 
to  British  co-operation  since  its  creation  in  1869  are 
inestimable.  Of  Italy  and  Switzerland  it  may  be  said  that 
their  co-operative  history  dates  from  the  formation  of  their 
Co-operative  Union  (1886  in  Italy,  1890  in  Switzerland). 
The  British  Co-operative  Union  embraces  1,300  societies  with 
4,109,843  members,  that  is,  almost  all  British  co-operators. 
In  Switzerland  the  Union  embraces  400  societies  out  of  the 
total  of  400,  though  it  is  true  that  some  of  them  are  not 
consimiers'  societies.  The  new  Union  of  German  Consumers' 
Societies  (created  in  1902)  numbers  1,300  societies  with 
more  than  2,800,000  members.^ 

These  Unions  each  year  gain  a  fairly  large  number  of 
new  societies,  which  wish  to  profit  by  their  advice,  but  it  is 
too  often  the  case  that  when  the  societies  become  strong  they 
seek  to  show  their  independence  by  leaving  the  Union,  and 
attempt  to  prove  that  they  have  grown  sufficiently  to  stand 
on  their  own  feet.*    Even  if  this  were  true  they  ought  to  real- 

1  In  1921  there  were  more  than  300  societies  affiliated  with  The  Co^ 
operative  League.  These  were  all  consumers'  societies.  There  are 
hundreds  of  other  societies  which  doubtless  would  have  joined  were 
it  not  for  the  fact  that  they  were  already  affiliated  with  other  federa- 
tions or  unions  which  gave  them  the  advice  and  guidance  that  The 
Co-operative  League  offers  its  members.  Most  of  the  Jewish  societies 
have  been  affiliated  with  the  Federation  of  Jewish  Co-operative  Socie- 
ties (recently  merged  with  The  Co-operative  League).  Hundreds  of 
farmers'  societies  are  affiliated  with  the  Farmers'  Educational  and  Co- 
operative Union,  the  most  progressive  of  the  organizations  among 
the  farmers. 

*  Author's  Note.  This  is  so  in  one  of  the  biggest  societies  in  Paris, 
the  Bellevilloise,  but  is  not  peculiar  to  France.  Big  societies  abroad 
sometimes  do  the  same.  Thus  the  biggest  Italian  society,  the  Unions 
Co-operativ(i  of  Mijan,  is  not  a  member  of  the  Italian  National  League, 


CO-OPERATIVE  FEDERATIONS  155 

ize  that  it  is  precisely  because  they  are  strong  and  rich  that 
the}'  should  be  a  support  to  the  Union  and  to  the  small  soci- 
eties which  remain  faithful  to  it,  and  that  in  withdrawing 
their  support  they  commit  a  grave  sin  against  the  duty  of 
solidarity. 

In  France,  the  old  Unions  which  have  since  disappeared, 
did  much,  in  spite  of  their  weakness,  for  the  development  of 
the  co-operative  movement. 

The  old  Union  Cooperative"  which  was  founded  by  M.  dc 
Boyve,  organized  numerous  congresses,  published  a  bulletin 
and,  after  1893,  a  year-book.  It  collected  the  first  statistics 
of  French  co-operation;  it  organized  the  consumers'  co- 
operative section  in  the  two  Paris  exhibitions  of  1889  and 
1900,  and  in  the  majority  of  foreign  exhibitions ;  it  took  part 
in  the  formation  of  the  International  Co-operative  Alliance ; 
directly,  or  by  means  of  its  legal  committee,  it  gave  advice 
on  countless  matters.  It  took  part  in  the  drawing  up  of 
many  sets  of  rules,  and  defended  a  whole  host  of  societies 
against  the  exactions  of  the  Government.  When  it  is  real- 
ized that  its  revenues  hardly  reached  £600  a  year  it  is  won- 
derful that  it  was  able  to  do  so  much  with  so  little  money. 

The  existing  Federation  Nationale  will  do  better  still; 
the  keen  co-operators  who  direct  its  policy  do  not  neglect 
anything  that  can  help  in  the  economic  and  moral  develop- 
ment of  co-operation  in  France.  Its  activities  include  the 
publication  of  a  newspaper  and  a  year-book,  the  organization 
of  periodical  conferences  and  annual  congresses,  the  appoint- 
ment of  delegations  to  the  international  congresses,  and  the 
relations  with  the  Government.  The  war,  which  might  have 
paralysed  its  activities,  provided  it,  on  the  contrary,  with 
unex])cctcd  opportunities  of  extending  its  influence.  Tlv. 
new  Federation  Nationale  des  Cooperatives  de  Consom- 
viation  was  formed  by  the  fusion  of  two  earlier  federations, 
the  "Union'*  and  the  "Bourse"  which  each  had  400  members 
{see  above,  page  43).     The  Federation  includes  a  few  more 


156     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

societies  than  the  totals  of  the  two  earlier  federations  added 
together.  The  amalgamation  caused  about  100  societies  to 
leave  the  earlier  bodies,  but  attracted  between  200  and  300 
new  members.  This  caused  a  small  gain,  but  the  membership 
is  still  far  from  What  might  be  expected.  Since  the  war 
progress  has  been  made.  The  figures  for  1921  are:  societies 
belonging  to  the  Union,  2,100  (out  of  4,000)  ;  members, 
about  1,000,000  (out  of  1,300,000). 

In  Belgium,  political  differences  have  prevented  the  forma- 
tion of  strong  unions.  In  Germany,  there  were  ten  co-opera- 
tive federations,  but  thc}^  were  as  mixed  up  as  were  the  States 
of  the  old  German  Confederation.  All  the  forms  of  co-opera- 
tive association — consumption,  production,  credit,  building* 
&c. — are  found  mixed  up  pell-mell,  and  as  they  have  oppo- 
site ideals  they  injure  more  than  they  help  each  other.  We 
mentioned  (page  45)  that  a  schism  had  occurred  in  the  most 
important  of  these  federations,  that  of  Berlin,  founded  by 
Schulze  Delitzsch,  and  that  a  new  union  formed  of  con- 
sumers' societies  only,  and  more  especially  of  working-class 
societies,  had  been  constituted  at  Hamburg.  But  this  does 
not  embrace  all  the  German  consumers'  societies. 

All  these  unions  are  formed  on  a  "parliamentary"  model, 
yet  with  the  difference  that  their  "parliament,"  which  is  a 
congress,  meets' only  once  a  year  for  a  few  days.  Between 
the  meetings  they  are  represented  by  a  permanent  committee 
of  delegates,  elected  by  the  societies  for  a  certain  number  of 
years.* 

*  Author's  Note.  The  "Fdd^ration  Nationale"  is  governed  by  a 
Central  Committee  elected  at  the  annual  congress  of  the  societies.  Mem- 
bers of  this  committee  must  be  practising  co-operators,  i.  e.,  they  must 
belong  to  a  consumers'  society,  and  make  a  certain  minimum  of  pur- 
chases. The  committee  meets  every  month.  There  are  three  sec- 
retaries, who  are  the  executive  officers. 

Besides  the  Central  Committee  there  are  special  commitees  which  ben- 
efit from  the  presence  of  a  number  of  specialists  in  the  various  branches 
of  work. 

Thus  the  secretary  of  the   Techmcal  Bureau  for  practical  and  eco- 


CO-OPERATIVE  FEDERATIONS  15T 

The  parliaments  and  committees  of  these  unions  have  only 
moral  authority  over  the  societies.  Would  it  not  be  possi- 
ble to  give  them  effective  authority?  It  would,  if  the  union 
became  a  national  society,  of  which  the  local  societies  were 
merely  branches.  This  is  the  ambitious  plan  which  Mr.  J.  C. 
Gray,  the  late  General  Secretary  of  the  British  Co-operative 
Union,  proposed  at  the  inaugural  session  of  the  Congress, 
held  at  Birmingham,  in  1906.  Not  only  would  the  local 
societies  lose  their  autonomy,  they  would  only  have  the  dis- 
posal of  half  their  profits,  the  other  half  would  be  paid  into 
the  exchequer  of  the  national  co-operative  society,  which 
would  use  it  as  seemed  best  to  it  in  the  interests  of  co-opera- 
tion. The  committee  of  the  national  co-operative  society, 
which  would  include  the  Wholesale  Society  would  be  elected 
by  all  the  societies,  on  a  basis  which  would  have  to  be  de- 
termined. 

This  project  has  little  chance  of  being  realized  for  a  long 
time,  at  least  in  France.  Not  only  are  the  local  societies 
very  jealous  of  their  independence,  and  disinclined  to  allow 
themselves  to  be  absorbed  in  this  collective  organization  and 
to  give  it  half  their  profits,  but  even  if  they  consented,  it  is 
feared  that  half  their  members  would  leave  them. 

Obviously  the  work  of  these  unions  cannot  be  carried  on 
without  expenditure,  and  therefore  they  need  a  fund.  This 
fund  is  furnished  by  the  subscriptions  of  the  societies,  so 
that   the  development   of  the  union,  and  therefore  of  the 

nomic  questions  was  formerly  M.  Albert  Thomas,  later  Under-Secre- 
tary of  State  for  Munitions  in  the  War  OflBce.  By  a  curious  coinci- 
dence one  of  the  directors  of  the  "F4d4ration  Nationale  Co-op4rative," 
M.  Auguste  MiJller,  held  high  office  in  the  German  Ministry  .of  Food. 

The  Legal  Bureau  deals  with  the  numerous  legal  questions  sent  in 
by  the  societies. 

The  Educational  Committee  deals  with  clubs,  excursions,  and,  above 
all,  the  education   of  children. 

Besides  the  National  Federation,  France  is  divided  into  regional 
federations,  17  in  number,  whose  delegates  meet  in  Paris  every 
month.  . 


158     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

co-operative  movement  itself,  depends  more  or  less  on  the 
willingness  with  which  the  societies  pay  their  contributions. 

The  constitution  of  the  British  Co-operative  Union  is 
rather  complicated.  It  is  governed  by  a  Central  Board  of 
67  members,  elected  by  regional  sections,  which  meets  only 
twice  a  year.  Next,  there  is  a  smaller  committee,  the  United 
Board,  formed  of  14  members,  which  meets  more  often ;  and, 
above  all,  a  general  Secretary,  who  is,  in  fact,  the  head  of 
the  organization,  the  head  offices  of  which  are  at  Manchester. 

The  expenses  of  these  unions  generally  include  the  salary 
of  at  least  one  permanent  secretary,  and  often  other  em- 
ployes, the  rent  of  offices  for  the  meetings  of  the  com- 
mittees, and  the  expenses  of  correspondence  and  publish- 
ing. In  Britain  these  expenses  amount  to  a  large  sum.  The 
subscriptions  of  the  affiliated  societies,  fixed  at  Id.  per  mem- 
ber,^ though  this  rate  is,  in  fact,  often  exceeded,  produce 
more  than  £16,000  a  year.  Special  donations  and  receipts 
from  the  sales  of  publications  raise  this  to  £20,000. 

In  France,  the  turnover  is  taken  as  the  basis  of  contribu- 
tion, rather  than  the  number  of  members,  as  it  is  more  easily 
ascertained.  The  basis  taken  has  been  five  centimes  per 
100  francs  turnover,  of  which  one  and  one  half  centimes  is 
for  the  regional  federations.     In  fact,  the  average  purchases 

5 
per  member  being  800  francs,  that  represents  800:x— — =40 

centimes.  The  total  comes  to  Fr.  380,000  or  £7,400  in 
present  currency,  including  the  subscription  from  the 
Wholesale  Society. 

Section  2. — Purchasing  Federations 
These  have  a  purely  economic  object — the  purchasing  in 

2  According  to  Professor  Hall  of  the  British  Co-operative  Union, 
this  rate  has  now  l?een  increased  to  2d.  per  member,  producing  35,000 
pounds  annually, 


CO-OPERATIVE  FEDERATIONS  159 

common  of  the  goods  necessary  for  supplying  the  affiliated 
societies. 

The  federation  of  co-operative  societies  for  purchasing  in 
common  has  the  following  advantages: — ' 

(1)  It  reduces  the  purchase  price  to  each  society,  because 
the  purchases  are  made  in  large  quantities.  It  is  clear  that 
just  as  the  grouping  of  individuals  to  make  purchases  in 
common  enables  them  to  reduce  the  price,  so  also  does  the 
grouping  of  societies.  The  federation  is  only  a  co-operative 
society  of  co-operative  societies. 

(2)  It  facilitates  the  starting  of  small  societies.  It  is 
obvious  that  the  initial  stage  of  any  undertaking  is  the  most 
difficult,  and  it  is  particularly  so  in  co-operation.  A  young 
society  which  has  only  a  few  members  and  small  capital,  no 
experience  of  business,  and  which  is  the  object  of  the  hostility 
of  all  traders  of  the  district,  runs  a  great  risk  of  dying  in 
infanc3\  The  world  laments  the  rate  of  infant  mortality 
for  about  one-quarter  of  the  babies  born  die  during  the 
year  which  follows  their  birth.  Well,  the  rate  of  mortality 
among  infant  co-operative  societies  is  as  pitiable  {see  later, 
Chapter  xni). 

But  the  existence  of  a  purchasing  federation  is  enough  to 
alter  this  sad  state  of  affairs,  because  it  gives  small  socie- 
ties the  same  terms  as  big  ones.  It  sells  them  the  goods 
they  need  at  the  same  price.  Not  only  does  it  give  them  the 
benefit  of  the  same  prices  as  their  older  sister  societies  pay, 
but  it  saves  them  from  the  blunderings  and  blind  gropings 
common  to  first  attempts,  by  giving  them  the  necessary 
advice  and  sending  them  all  they  need  on  demand.  Thus  a 
society  which  is  being  started  need  not  have  any  specialists 

3  All  the  following  advantages  accrue  to  societies  aflSliated  with 
wholesale  co-operatives  in  the  United  States  except  Jf5  (manufacturing 
of  goods  by  the  co-operators  themselves).  Our  co-operative  whole- 
sales,— with  the  exception  of  the  Co-operative  Central)  Exchange  of 
Superior,  Wisconsin,  which  has  a  biscuit  worlds, — have  scarcely  pro- 
gressed to  this  point. 


160     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

among  its  members.  It  need  only  write  to  the  federation 
saying,  "We  are  such-and-such  a  society,  send  us  all  \fe 
shall  need." 

As  for  the  big  societies — ^which  sometimes  scorn  to  belong 
to  federations,  saying  to  themselves  that  they  are  strong 
enough  to  get  the  same  terms  from  traders — they  must 
understand  that  though  they  may  make  no  money  gain 
(wliich  generally  is  not  so)  yet  their  development  and  their 
very  existence  are  bound  up  with  that  of  their  little  sisters 
in  the  great  co-operative  family. 

(3)  It  stops  illegal  commissions  (commonly  called  pots 
de  vin),  and  so  raises  the  moral  tone  of  co-operative  trade 
and  saves  the  societies  from  a  vice  that  is  already  too  com- 
mon in  business.  When  purchases  are  made  through  a 
wholesale  society,  the  members  of  the  committee  of  a  society 
have  no  direct  relations  with  the  suppliers.  It  may  perhaps 
be  said  that  it  is  the  managers  of  the  wholesale  society  who 
will  get  the  illegal  commissions.  Perhaps,  but  as  they  are 
better  watched  (to  put  the  matter  on  its  lowest  grounds) 
and  as  they  are  only  a  few  persons  instead  of  a  few  thou- 
sands, the  evil  will  be  lessened. 

(4)  It  prevents  any  boycotting  by  wholesalers  and  manu- 
facturers. It  sometimes  happens  that  the  wholesalers  of  a 
district  make  an  agreement  to  refuse  to  sell  to  a  co-operative 
society,  in  the  hopes  of  killing  it.  This  has  been  the  case 
more  than  once  in  England,  Sweden,  &c.  (See  Chapter  XII, 
The  Conflict  between  Co-operative  Societies  and  Traders.) 
This  form  of  tactics  becomes  useless  when  the  co-operative 
societies  are  backed  by  a  federation  which  undertakes  to  sup- 
ply them  with  all  they  need.  What  does  it  then  matter  to 
them  if  the  local  merchants  refuse  to  supply  them?  They 
can  afford  to  laugh  at  their  opponents.  In  this  way  small 
co-operative  societies  have  been  able  to  bring  their  adver- 
saries to  their  knees,  for  not  only  has  the  English  Wholesale 


CO-OPERATIVE  FEDERATIONS  161 

Society  supported  them,  but  it  has  voted  £40,000  as  a  kind 
of  "war  chest"  to  fight  such  boycotts  as  may  come  in  the 
future. 

(  5 )  It  enables  goods  to  be  manufactured  by  the  co-opera- 
tive societies.  It  is  not  easy  for  a  single  co-operative  society 
to  set  up  a  boot  factory,  a  soap  works,  &Cy,  for  itself,  be- 
cause it  is  not  large  enough  to  guarantee  sufficient  sales, 
unless  the  society  has  a  very  large  number  of  members,  which 
few  have. 

On  the  other  hand,  when  a  purchasing  federation  bulks 
the  orders  of  hundreds  of  societies  it  can  erect  factories  with 
the  certainty  of  success,  because  it  knows  beforehand  what 
sales  it  can  count  on.  Thus  the  federation  of  English  soci- 
eties, the  Co-operative  Wholesale  Society  of  Manchester,  has 
been  able  to  build  flour  mills,  soap  works,  boot  factories, 
and  jam  factories,  which  produced  goods  to  the  value  of 
£12,000,000  in  1915.* 

What  societies  by  themselves  could  possibly  attempt 
similar  enterprises?  And  yet  it  is  recognized  that  it  is  only 
by  production  that  co-operation  can  change  the  present 
economic  system.  So,  federation  is  necessary,  because  he 
who  seeks  the  end  must  seek  the  means. 

(6)  It  makes  possible  the  organization  of  works  of  general 
utility,  and  if  it  does  not  do  educative  work,  as  that  is  more 
the  business  of  Unions,  it  renders  at  least  such  services  as 
banking  and  insurance.  If  such  work  be  left  to  the  separate 
societies  to  organize,  the  dissipation  of  energy  will  prevent 
anything  being  done. 

There  are  three  degrees  in  the  grouping  of  societies  for 
purchasing,  indeed,  one  may  say  three  stages. 

(1)  The  first  is  the  ^^enc?/,^     The  agency  confines  its  ac- 

•  Author's  Note.  In  1919  the  figure  rose  to  £26,000,000  due  largely 
to  the  rise  in  prices. 

*  We  do  not  know  of  American  co-operative  societies  which  have 
established    anything   corresponding   to    this    agency,    although    we    do 


162     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

tivities  to  obtaining  quotations  from  wholesalers  for  the  so- 
cieties, and  collecting  and  transmitting  orders  to  the  whole- 
salers. 

This  first  is  the  simplest  form,  because  no  store  is  needed, 
but  merely  an  office  and  no  capital  is  required,  as  the  only 
expenses  are  the  small  ones  of  advertisement  and  corre- 
spondence. But  if  the  expenses  are  very  low  the  services  it 
can  render  are  very  limited.  It  can  hardly  realize  any  of 
the  great  advantages  which  we  have  mentioned  above;  it 
can  only  obtain  some  reduction  in  price  and  guarantee  of 
quality. 

Still,  it  is  wise  to  begin  by  this  unambitious  form  of  or- 
ganization. 

(2)  The  second  is  the  Syndicate,  which  is  not,  like  the 
first,  merely  an  office  for  the  transmission  of  orders,  but  does 
commission  work.  It  bulks  the  orders  of  the  societies  and 
buys  from  the  wholesalers  on  their  account.  This  is  the 
method  adopted  by  most  agricultural  societies  in  dealing  in 
seeds  and  manures.  Sometimes,  if  the  market  is  favourable, 
the  Syndicate  buys  on  its  own  account. 

This  second  form  is  stronger  than  the  first,  but  it  can 
hardly  do  without  capital,  or,  at  least,  guarantors,  if  it  is 
to  deal  directly  with  wholesalers. 

(3)  The  third  is  the  Wholesale  Society.  This  is  the  true 
co-operative  society  of  co-operative  societies,  such  as  we  were 
discussing  a  few  pages  back.  It  buys  direct  from  the  pro- 
ducers, or  itself  manufactures  all  that  is  necessary  to  supply 
its  members,  and  sells  to  them  at  wholesale  prices,  or,  at 
least,  at  very  slightly  increased  prices,  to  allow  a  margin  for 
emergencies.  In  any  case,  if  there  be  profits  they  are  di- 
vided, not  among  the  shareholding  but  among  the  purchas- 

know  of  localities  where  such  Agencies  might  profitably  be  established. 
Corresponding  to  the  French  Syndicate  is  what  many  American  co- 
operators  know  as  the  Buying  Agency. 


CO-OPERATIVE  FEDERATIONS  163 

ing  societies ;  thus,  the  same  principle  is  applied  to  the  so- 
cieties, as  they  themselves  apply  to  their  members. 

For  this,  not  only  is  it  necessary  to  have  a  large  capital, 
but  huge  stores  and  whole  battalions  of  employes  also.  But 
it  is  possible  to  obtain  an  indefinite  degree  of  power,  as  in 
England,  where  it  is  feared  that  the  Wholesale  Society  may 
come  to  reign  almost  despotically  over  all  English  co-opera- 
tion. 

The  Rochdale  Pioneers — ^who  cannot  be  too  much  admired 
— foresaw  everything,  and  created  in  their  own  society  a 
wholesale  store  for  helping  others ;  but  it  was  not  until  1864 
that  the  real  wholesale  society,  the  C.  W.  S.,  was  started. 
It  began  with  a  membership  of  fifty  societies,  and  a  capital 
of  £1,000,  and  in  1913  it  had  1,200  societies  *  and  a  share 
capital  of  £2,131,000,  over  £4,000,000  loan  capital,  21,000 
clerks  or  workers,  huge  warehouses  where  it  does  business, 
and  more  than  100  factories  where  it  produces 
£9,000,000  worth  of  goods  of  every  variety.  This  is  the 
pre-war  figures  for  the  English  Wholesale,  but  the  post-war 
figures  enables  us  to  measure  the  progress  made  in  1920: 
Sales,  £104<  million;  production,  £33  million;  land  cultivated 
in  England,  32,500  acres.f  The  enormous  increase  in  the 
C.  W.  S.  funds  is  specially  remarkable.  It  imports,  partly 
in    its    own    ships,J    £8,000,000    worth    of    the    products 

*  Author's  Note.  That  is  to  say,  almost  all  the  English  societies. 
The  Scottish  Ck>-operative  Wholesale  Society,  of  Glasgow,  Includes 
264  Scottish   societies. 

f  Author's  Note.  In  1921,  however,  there  was  a  notable  decrease: 
only  80  million  sales,  26  million  production. 

t  Author's  Note.  To  import  the  goods  which  it  consumes  it  com- 
missioned a  fleet  of  six  ships,  which  sailed  under  the  house  flag  of  the 
C.  W.  S.  But  it  was  found  that  the  ships  cost  more  than  transport  by 
the  ordinary  shipping  companies,  so  four  of  the  ships  were  sold  to  a 
big  railway  company  having  ships  of  its  own.  Only  two  ships  were 
kept,  which  trade  between  Manchester  and  Rouen.  This  is  a  step  back- 
ward and  an  abandonment  of  co-operative  principles.  Besides,  the 
financial  loss  was  perhaps  more  than  balanced  by  the  added  pres- 
tige. 

One  day  is  set  apart  each  year  (generally  in  October)  for  the  sale 
pf  raisins  and  other  dried  fruits,  which  the  C.  W.  S.  buys  in  Greece 


164,     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

of  all  countries ;  it  bought  at  the  price  of  £50,000  a 
large  piece  of  land  beside  the  Manchester  Ship  Canal  to 
make  docks.  It  has  three  establishments  in  Denmark  (where 
it  buys  £4,000,000  worth  of  butter  and  bacon)  one  in  the 
United  States,  one  in  Germany  (at  Hamburg),  one  in  Swe- 
den, two  in  France  (at  Rouen  and  Calais),  one  in  Spain,  one 
in  Canada,  and  one  in  Australia.  Besides  these  establish- 
ments for  purchasing  abroad,  it  has  a  tallow  factory  in  Aus- 
tralia, and  tea  plantations  in  Ceylon  and  India  of  40,000 
acfes.  In  England  itself  it  has  six  estates,  where  it  grows 
strawberries  and  tomatoes,  and  where  it  has  set  up  a 
convalescent  home  for  its  members  and  their  families.  It 
will  soon  own  coal  mines.  During  the  war  it  received  large 
orders  for  food  and  clothing  from  the  English  Government, 
and  even  from  the  Russian  Government  (notably  for  boots). 

The  capital  of  the  Wholesale  is  furnished  partly  by  the 
shares  which  all  the  affiliated  societies  must  subscribe  for  at 
the  rate  of  fifteen  £1  shares  for  every  ten  members,  and 
partly  by  loans  from  the  societies. 

It  has  a  bank  to  regulate  its  huge  operations,  which  does 
all  the  usual  banking  business  of  discounting,  taking  deposits, 
giving  advances,  &c.,  and  thanks  to  which  the  smallest  soci- 
ety can  obtain  loans  at  lower  rates  than  the  largest  capital- 
ists can  get  from  the  Bank  of  England.  During  the  crisis 
of  1907,  when  the  Bank  of  England  raised  its  discount  rate 
to  7  per  cent.,  the  Wholesale  Bank  continued  to  lend  at 
3^2  pPi"  cent.  A  short  time  ago  the  Scottish  C.  W.  S.  lent 
£500,000  to  the  municipality  of  Glasgow.* 

We  have  already  mentioned  that  it  has  taken  up  insurance 
in  all  its  forms. 

It  does  not  try  to  make  profits  from  its  immense  business, 
which  is  nearly  £100,000,000.  Still,  as  it  cannot  calculate 
the  exact  prices  which  should  be  charged  it  works  on  a  small 

and  Asia  Minor.    On  this  one  day  its  sales  reach  or  exceed  £160,000. 
*  Author's  Note.    The  turnover  of  the  bank  in  1920  was  155  million 
pounds. 


CO-OPERATIVE  FEDERATIONS  165 

margin  which  realized  about  £1,200,000  a  year  in  1916, 
but  this  margin  of  profit  decreased  greatly  in  1917,  and  van- 
ished altogether  in  1921.'* 

Its  strength  is  so  great  that  there  is  a  fear  that  it  will  be 
abused,  and  co-operation  turned  into  a  big  centralized  bu- 
reaucratic machine.  We  shall  consider  this  matter  later  on 
(see  Chapter  XIV). 

Still,  there  remains  a  margin  for  development,  because  it 
is  far  from  selling  to  the  co-operative  societies  everything 
which  they  sell  to  their  members.  Its  total  sales  can  still 
increase  greatly  *  when  all  the  societies  make  it  a  rule  to 

5  During  1921  the  C.  W.  S.  lost  1,416,000  pounds.  The  loss 
is  attributed  to  strilces,  unemployment,  depreciation  in  value  of  goods 
on  hand.    The  reserve  fund  was  ample  to  cover  the  loss. 

*  Author's  Note.  It  must  not  be  thought  that  the  sales  of  the  Whole- 
sale can  ever  equal  the  sales  of  the  societies  because: — 

(1)  Retail  prices  are  always  from  15  per  cent,  to  20  per  cent,  above 
wholesale  prices. 

(2)  The  distributive  societies  themselves  produce  part  of  the  things 
they  consume,  notably  bread,  which  is  a  big  item,  or  they  buy  from 
the  co-operative  productive  societies,  as  we  shall  see  later.  These  two, 
added  together,  represent  about  30  per  cent,   of  the  sales. 

The  margin  for  extension  of  the  purchases  from  the  Wholesale  is 
less  than  appears.  Still  it  is  large,  and  is  still  larger  in  other  countries. 
The  following  table  shows  the  proportion  of  sales  by  societies  and  the 
wholesale  society  in  some  countries.  The  relation  between  the  two 
figures  is  a  sure  index  of  the  degree  of  co-operative  organization. 

In  this  comparison  the  date  of  the  establishment  of  the  wholesale 
society  must  be  taken  into  account,  but  the  development  of  the  whole- 
sale society  is  not  dependent  only  upon  its  age.  This  is  shown  in  the 
following  table   (the  figures  are  for   1914) : — 

Head  Office 

and  Date   of                  '  Sales   of  Sales   of 

Foundation.  Wholesales.  Retail   Stores.  Proportion. 

Manchester     (1864)     ....  £35,000,000  ...  £87,900,000  ...     50% 

Glasgow      (1868)       9,435,000  ...  18,000,000  ...    52% 

Copenhagen    (1888)       ...  3,920,000  ...  6,000,000  ...    65% 

Bale    (1892)     1,840,000  ...  5,760,000  ...    32% 

Hamburg    (1894)     7,880,000  ...  26,360,000  ...    30% 

Moscow    (1898)     1,120,000  ...  32,000,000  ...  3.5% 

Helsingfors     (1904)      ....  440,000  ...  12,840,000  ...  3.5% 

Paris    (1907)     1,040,000  ...  2,520,000  ...    41% 

Today  all  these  figures  are  doubled,  and  in  some  countries  quadrupled. 


166     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

supply  themselves  through  the  Wholesale  only.  It  is  certain 
that  they  would  be  rewarded  for  their  fidelity  by  an  increase 
in  their  profits. 

There  is  nowhere  in  the  whole  economic  order  anything 
comparable  to  the  Wholesale  Society,  except  the  trusts  and 
cartels.  There  are,  however,  notable  resemblances  between 
these  two  organizations.  The  federation  of  consumers'  soci- 
eties for  producing  are  really  consumers'  trusts,  and  will  per- 
haps have  the  salutary  effect  of  preventing  the  public  and  the 
markets  from  being  delivered  defenceless  into  the  hands  of 
the  great  federated  capitalists.® 

It  is  true  that  the  mammoth  Co-operative  Wholesale  Soci- 
ety is  unique  in  the  world.  Still,  in  Glasgow  (for  Scotland) 
and  in  Hamburg  (for  Germany)  there  are  already  wholesale 
societies  which  do  very  large  businesses. 

The  Co-operative  Wholesale  Society  of  Glasgow,  although 
much  smaller  than  that  of  Manchester,  judging  by  turnover, 
is  not  behind  it  in  enterprise  or  ambition.  It  has  a  large 
number  of  factories,  whose  production  reaches  £6,000,000. 

The  Wholesale  Society  at  Hamburg  has  served  as  a  rally- 
ing point  for  the  workers'  societies  which  broke  off  from  the 
General  Union  at  Berlin  after  the  Congress  at  Kreuznach  in 
1902.  It  is  probable  that  the  Hamburg  federation  will 
develop  considerably,  especially  as  the  Germans  are  past 
masters  in  organization  and  federation. 

If  its  progress  from  its  birth  in  1894  to  1914  be  compared 
with  that  of  the  English  Wholesale  Society  for  the  corre- 
sponding twenty  years  (1864  to  1884)  it  is  seen  that  it  is 
even  more  rapid,  for  in  the  twentieth  year  of  its  life  the 
Wholesale  of  Manchester  only  did  a  business  of  £4,675,000, 

But  these  enormous  increases  mean  nothing,  on  account  of  the  depre- 
ciation of  the  mark,  crown,  rouble,  etc.  For  the  two  British  whole- 
sales the  increase,  though  large,  hardly  exceeds  the  rise  in  prices. 
The  same  is  true  of  France.  But  for  Switzerland  the  increase  is  far 
greater  than  the  rise  in  prices. 

6  Such  powerful  wholesales  are  needed  in  the  United  States  to  com- 
bat the  highly  organized  chain-store  corporations. 


CO-OPERATIVE  FEDERATIONS  167 

while  the  Hamburg  Society  at  the  same  age  did  nearly  £8,- 
000,000. 

It  is  noticeable  that  Belgium,  in  spite  of  its  great  co- 
operative activity,  does  not  appear  in  the  list.  There  is 
however,  a  Belgian  federation,  created  in  1900,  but  which  has 
only  a  small  number  of  affiliated  societies,  and  does  but  a 
small  trade. 

We  in  France  are  far  behind.  In  1887  the  Central  Com- 
mittee, which  has  now  disappeared,  had  succeeded  with  much 
trouble  in  establishing  a  wholesale  society.  It  did  not  begin 
badly,  since  it  had  reached  a  turnover  of  £100,000  in  1892, 
but  it  failed,  for  various  reasons,  too  long  to  set  out  here. 
This  check  retarded  the  co-operative  movement  a  great 
deal.  The  first  purchasing  federation  was  established  in 
1885,  at  the  same  time  as  the  "Union  Cooperative"  under 
the  humble  name  of  the  "Chambre  Economiqu^"  (Economic 
Office).  In  1888,  the  CJiambre  Economique  took  the  title  of 
"Federation  Nationale  des  Societes  Cooperatives"  (the 
National  Federation  of  Co-operative  Societies),  and  acted 
at  first  as  a  purchasing  agency.  That  is  to  say,  it  confined 
itself  to  buying  to  the  order  of  the  societies,  many  of  which 
were  slow  in  paying.  It  made  the  mistake  of  trying  to  form 
itself  too  soon  into  a  real  wholesale  society  with  its  offices 
at  Charenton.  The  big  Parisian  societies  abandoned  it, 
alleging  that  they  could  buy  better  directly  than  through  the 
Federation,  and  because  of  personal  quarrels.  The  bad  or- 
ganization of  the  Federation  justified  these  desertions  to 
some  extent.  The  Wholesale  Society  failed  in  1895,  leav- 
ing big  losses  to  be  made  good  by  the  societies  which  had 
remained  loyal  to  it  and  the  Central  Committee. 

Later,  two  distinct  and  even  rival  organizations  were 
formed : — 

(o)  The  Office  Cooper atif"  (the  Co-operative  Office), 
an  annex  of  the  Co-operative  Union,  was  at  first  a  simple 
agency,  then  a  syndicate  for  grouping  orders,  and  was  at 


168     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

last  transformed  into  the  "Cooperative  de  gros"  (Co-opera- 
tive Wholesale  Society).  It  was  formed  in  1900,  and  had 
not  reached  a  turnover  of  £80,000  in  1912,  when  it  was 
amalgamated  with  the  socialist  federation. 

(6)  The  Wholesale  Society  {Magasin  de  gros)  of  the 
Socialist  Bank,  thanks  to  the  stronger  feeling  of  loyalty 
which  inspires  societies  engaged  in  a  class  war,  made  more 
rapid  progress.  Formed  in  1906,  its  turnover  was  £400,000 
when  the  amalgamation  took  place  in  1912, 

Today,  the  two  rival  federations  are  united  in  the  Whole- 
sale Society  situated  at  29,  Boulevard  Bouddon,  Paris.  The 
great  increase  in  turnover  which  was  expected  from  this 
amalgamation  was  not  realized  immediately,  and  the  Whole- 
sale passed  through  some  anxious  moments.  This  state  of 
things  was,  however,  inevitable,  considering  its  very  small 
capital,  £3,520.  If  the  society  had  to  deal  with  a  trade  of 
£400,000  a  year  it  would  therefore  have  been  necessary  for 
it  to  turn  over  its  capital  one  hundred  and  thirty  times  in  the 
year,  or  once  every  three  days !  The  Wholesale  Society  was 
obliged  to  obtain  its  working  capital  from  deposits 
(£140,000),  and  this  created  a  very  difficult  situation,  indeed 
a  highly  dangerous  one  for  an  ordinary  bank.  Happily,  the 
depositors  in  the  Wholesale  Society  were  either  co-operative 
societies  or  trade  unions  which  wished  to  help,  not  to  embar- 
rass it.  Also,  the  C.  W.  S.  generously  came  to  the  rescue 
of  its  young  sister  by  lending  it  £24,000.  Meanwhile,  the 
war  broke  out  and  did  on  the  whole  more  good  than  harm, 
for  the  local  co-operative  crisis  was  overwhelmed  and  almost 
forgotten  in  this  great  general  crisis.  After  the  war  the 
Union  has  emerged  from  this  test  stronger  than  before. 
The  sales  are  now  more  than  £8,000,000. 

As  regards  production  the  French  Wholesale  Society  had 
only  preserve  and  boot  factories,  doing  between  them  busi- 
ness to  the  value  of  £600,000.^ 

7  By  1921  the  French  Wholesale  Society  is  also  manufacturing  under- 


CO-OPERATIVE  FEDERATIONS  169 

There  are  also  territorial  district  associations  which  have 
no  right  of  sale  or  purchase,  and  whose  one  function  is  to 
send  delegates  to  the  quarterly  meetings.  Perhaps  it  would 
have  been  wise  in  a  country  with  such  varying  forms  of  pro- 
ductive activity  as  France — which  in  spite  of  its  apparent 
unit}',  has  kept  distinct  local  characteristics — to  have  left  a 
certain  amount  of  independence  to  the  district  federations. 
As  it  is,  there  is  a  tendency  to  revive  them  in  the  form  of 
agencies  of  the  Wholesale  Society. 

The  causes  which  have  made  federations  of  societies,  either 
for  purchasing  or  simply  for  mutual  defence,  so  difficult  to 
form  and  so  slow  to  progress,  are  worthy  of  careful  study. 
It  seems  certain  that  the  national  temperament  of  France, 
which  is  not  so  much  individualist  as  particularist,  is  largely 
responsible  for  it.  There  is  also  the  question  of  vanity, 
which  makes  the  members  of  a  little  society  unwilling  to  give 
up  their  autonomy,  and  which  makes  the  members  of  the  com- 
mittee unwilling  to  give  up  any  of  their  power  of  control  or 
of  purchasing;  they  wish  to  deal  directly  with  the  whole- 
salers. Worst  of  all,  there  is  often  the  fear  that  certain 
abuses  will  be  abolished  to  which  they  cling,  and  on  which 
they  live,  such  as  illicit  commissions  from  suppliers,  which 
would  have  to  be  given  up  if  orders  passed  through  a  central 
office  or  wholesale  society.  Some  things  which  happened 
lately  in  England  have  shown  us  that  English  societies  them- 
selves were  not  wholly  free  from  this  plague,  which  has  killed 
some  French  societies  and  contaminated  many  others.® 

clothinpr.  chocolate,  and  operating  a  coffee  roastery  and  a  sawmill. 
The  following  figures  show  how  rapidly  the  business  of  the  Society  is 
growing. 

AflUiated  Share  Cap.  Turnover 

Societies  &   Reserve 

1914-15  425  £11,780  £548,800 

1920-21  1700  £200,000  £8,250,000 

(Figures  quoted  from  People's  Year  Book  of  the  C.  W.  S.  and  the 

S.  C.  W.  S.) 
8  In  such  a  large  country  as  the  United  States  there  will,  of  course, 

have  to  be  District  Wholesales  before  wholesaling  on  a  national  scale 


170     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Above  the  national  federations  there  is  room  for  an  Inter- 
national Federation ;  in  fact  ,  such  exists  at  least  in  embryo, 
under  the  name  of  the  International  Co-operative  Alliance. 
One  of  its  first  initiators  was  M.  de  Boyve,  who  suggested 
it  at  the  British  Co-operative  Congress  at  Plymouth  in 
1886.  It  was  not  officially  formed,  however,  until  1895, 
when  its  first  Congress  was  held  in  London.  Since  then  it 
has  met  every  three  years — at  Paris,  the  Hague,  Budapest, 
Cremona,  Hamburg,  and  Glasgow — and  its  reports  form  a 
valuable  contribution  to  the  study  of  the  co-operative  move- 
ment throughout  the  world.  It  has  published  a  bibliography 
of  co-operative  literature  in  all  languages,  and  publishes  a 
monthly  bulletin  in  English,  French,  and  German,  which  was 
continued  as  well  as  possible  in  spite  of  the  war. 

The  Alliance  is  governed  by  a  permanent  committee,  which 
formerly  filled  up  its  vacancies  by  co-option;  but  the  mem- 
bers are  now  elected  by  the  federations  of  their  respective 
countries  (except  for  M.  de  Boyve,  who  was  given  the 
title  of  perpetual  honorary  secretary,  as  the  one  still  living 
founder  of  the  Alliance.)*  The  number  of  members  which 
each  country  has  a  right  to  elect  is  settled  by  the  amount 
of  its  subscriptions  (a  contribution  of  £10  gives  a  right  to 
elect  one  member,  and  £600  to  elect  seven  members,  which 
number  may  not  be  exceeded).  Seven  is  the  number  of  Brit- 
ish representatives.  Germany  and  France  have  four  each; 
Switzerland  and  Hungary  three  each;  Austria,  Russia,  Fin- 
land, Sweden,  Denmark,  Holland,  and  Belgium  two  each; 
Italy,  Roumania,  Serbia,  and  Norway  one  each.f  An  embar- 
rassing question  which  arose  before  the  war  is  that  of  recog- 

is  attempted.  Meanwhile,  although  we  find  all  these  factors  which 
would  restrict  federations  of  societies  for  purchasing,  the  slow  develop- 
ment of  co-operative  wholesales  among  American  societies  is  princi- 
pally due  to  the  fact  that  there  are  few  sections  of  the  country  suf- 
ficiently covered  with  co-operative  stores  to  warrant  such  federations. 

*  Author's  Note.  There  are  also  honorary  members  named  directly 
by  the  Central  Committee. 

•[Author's  Note.    Since  the  Congress  of  Basel  in  1921,  the  United 


CO-OPERATIVE  FEDERATIONS  171 

nizing  nationalities  which  claim  independent  representation. 
As  is  seen  above,  this  was  granted  to  Finland,  but  refused  to 
Bohemia  and  Poland  wliich  aroused  strong  protests.  Hence- 
forth they  will  certainly  get  direct  representation  in  the 
Alliance,  but  conflicts  may  be  looked  for  about  the  numerous 
republics  which  will  issue  from  the  dismemberment  of 
Russia.  This  electoral  system,  which  seems  to  us  more 
fiscal  than  democratic,  has  not  failed  to  provoke  criti- 
cism, yet  it  is  the  socialists  who  have  supported  it  most 
strongly. 

The  Alliance  includes  all  forms  of  co-operative  associa- 
tion, i.  e.,  consumption,  production,  credit,  and  agriculture ; 
but  the  first  tends  more  and  more  to  predominate. 

Originally,  however,  this  association  had  for  its  chief 
object  the  safeguarding  of  the  rights  of  producers,  to  the 
end  that  they  should  not  be  handed  over  to  the  despotic 
government  of  the  consumers,  as  was  foreshadowed  by  the 
great  growth  in  power  of  the  Wholesale  Society;  it  was  a 
sort  of  individualist  revolt  against  what  might  be  called 
co-operative  collectivism. 

To  effect  this,  the  Alliance  advocated,  if  not  self-govern- 
ing workshops,  at  least  a  share  in  the  profits  for  all  workers 
in  the  services  of  distributive  societies  engaged  in  produc- 
tion. Article  1  of  the  Laws  (now  revised)  said,  "The  Alli- 
ance has  for  its  aim  ...  to  hasten,  by  all  the  means  of 
propaganda  at  its  disposal,  the  moment  when  all  associations 
called  co-operative  shall  organize  in  favour  of  sharing  the 
profits  with  all  the  employes  without  exception."  But 
this  early  ideal  was  bit  by  bit  thrust  aside,  as  profit-sharing 
had  not  succeeded  to  any  great  extent,  and,  as,  moreover, 
the  socialist  element,  which  increased  on  the  committee  and 
in  the  congresses  of  the  Alliance,  was  absolutely  opposed  to 
it. 

States  and  Czecho-Slovakia  have  representatives  to  the  Central  Com- 
mittee of  the  Alliance. 


172     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

The  Alliance  has  rallied  to  its  support  today  all  the  big 
federations  of  all  countries,  besides  a  large  number  of  indi- 
vidual societies.  Britain  alone  supplies  about  half  of  the 
subscriptions ;  but  Germany  and  Austria  were  rapidly  in- 
creasing their  subscriptions  and  influence,  and  before  the 
war  it  was  seen  that  ere  long  the  control  of  the  Alliance 
would  be  transferred  from  London  to  Hamburg. 

The  program  of  the  Alliance  today,  as  recently  laid 
down  by  its  president.  Sir  William  Maxwell,  is: — 

(1)  The  moral  and  educative  aim  of  putting  the  co-oper- 
ators of  different  countries  in  touch  with  one  another  so 
that  they  can  teach  each  other  and  help  the  co-operative 
movement  by  their  union. 

(2)  The  practical  and  commercial  object  of  bringing  co- 
operative societies  in  different  countries  into  business  rela- 
tions so  that  the  products  of  those  which  produce  may  find 
outlets  in  those  which  only  distribute,  and  that  the  latter 
on  their  side  can  procure  their  goods  under  the  best  possible 
conditions.  An  international  wholesale  society  has  been 
projected. 

(3)  It  has  the  yet  higher  aim  of  establishing  peace  be- 
tween nations.  At  the  Glasgow  Congress  (1913),  notably, 
a  solemn  resolution  against  the  folly  of  armaments  was  car- 
ried. The  German  delegate,  von  Elm,  supported  the  motion, 
and  declared,  amid  applause,  that  in  Germany  all  co-opera- 
tors to  the  number  of  four  million  eight  hundred  thousand 
heads  of  families  in  80,555  societies  strongly  demanded 
peace.  "I  know,"  he  added,  "that  the  rulers  of  the  world 
pay  little  attention  to  the  wishes  of  co-operators,  but  it  will 
not  always  be  thus."  If,  in  fact,  as  we  believe,  wars  are 
caused  above  all  by  economic  causes,  and  are  continued  in 
the  struggle  for  profit  would  it  be  in  vain  to  hope  that  co- 
operation which  has  for  its  ideal  the  abolition  of  profit,  could 
establish  peace  .'* 

Still,  we  must  admit  that  of  these  three  aims  only  the  first 


CO-OPERATIVE  FEDERATIONS  173 

has  been  realized  to  any  degree.  The  realization  of  the  sec- 
ond is  made  difficult  by  the  fact  that  the  agricultural  and 
credit  societies,  and  even  the  productive  societies,  frightened 
by  the  imperialist  ambitions  of  the  consumers'  societies,  are 
gradually  leaving  the  Alliance.* 

As  for  the  third  aim,  one  can  hardly  hope  to  see  its 
accomplislmient  during  the  next  generation.  Nevertheless, 
the  International  Co-operative  Alliance  succeeded  in  living 
through  the  war,  and  its  bulletin,  published  in  three  lan- 
guages, English,  French,  and  German,  was  a  link  between 
co-operators  of  the  belligerent  countries.® 

*  Author's  Note.  For  a  detailed  history  of  this  institution  see  our 
prochure  on  the  "International  Co-operative  Alliance,"  which  has  been 
translated   into   English. 

8  A  national  union  of  the  co-operative  societies  of  the  United  States 
was  represented  by  duly  elected  delegates  for  the  first  time  at  the 
Congress  of  the  International  Alliance  held  in  Basle,  Switzerland,  in 
1921,  by  Dr.  and  Mrs.  James  P.  Warbasse.  It  was  at  this  Congress, 
also,  that  the  co-operators  of  the  belligerent  countries  of  the  Great 
"War  were  once  more  united  in  genuine  concord.  The  seating  of  dele- 
gates from  Russia  was  discussed  at  length  and  warmly,  for  it  had  not 
yet  been  definitely  established  that  the  Movement  in  that  country  was 
entirely  free  from  government  control.  Finally,  however,  the  two 
delegates  were  given  seats.  The  one  other  outstanding  event  of  the 
occasion  was  the  organization  of  the  International  Women's  Co-opera- 
tive Committee,  of  which  Frau  Emy  Freundlich  of  Austria  is  Chairman. 

Since  this  Congress  there  have  been  committees  at  work  studying  the 
entire  question  of  International  Trading,  the  formation  of  an  Inter- 
national Wholesale,  and  the  organization  of  an  International  Co-opera- 
tive Bank.  These  are  vexing  problems  in  any  event;  they  are  made 
more  vexing  by  the  fluctuations  in  the  rates  of  exchange  between  vari- 
ous countries,  and  by  the  fact  that  economic  resources  in  the  co-opera- 
tive movement  are  not  at  all  evenly  distributed  between  the  various 
European  countries:  the  Wliolesales  in  England  and  Scotland  are  far 
and  away  the  more  powerful  of  all  the  wholesales.  Moreover,  none  of 
these  problems  can  be  solved  separately.  International  Trading,  In- 
ternational Wholesaling  and  International  Banking  are  all  inextricably 
related  one  to  another.  If  these  committees  do  nothing  more  than 
study  the  ground,  gather  statistics,  and  bring  the  various  movements 
into  closer  contact  with  one  another  during  the  next  few  years,  they 
will  have  rendered  a  wonderful  service  to  the  Co-operative  Movement 
everywhere. 


CHAPTEE     XII 

THE     CONFLICT      BETWEEN      CO-OPERA- 
TIVE     SOCIETIES     AND      TRADERS 

I 

It  is  obvious  that  the  aim  of  co-operative  consumers'  socie- 
ties gradually  to  absorb  all  branches  of  trade  is  not  at  all 
satisfactory  to  traders,  particularly  those  who  are  menaced 
more  directly  thereby,  i.  e.,  the  retail  dealers.*  In  large 
towns,  such  as  Leeds,  Breslau,  Bale,  and  in  many  other 
smaller  towns,  this  evolution  is  well-nigh  accomplished ; 
that  is  to  say  almost  the  entire  population  makes  its  pur- 
chases at  the  co-operative  store.  Thus,  in  every  country 
the  conflict  is  keen,  more  so  in  France  than  elsewhere,  be- 
cause France  is,  perhaps,  the  country  in  which  small  trading 
is  the  most  developed,  as  are  also  small  industries  and  small 
holdings. 

*  Author's  Note.  Here  is  an  amusing  instance  of  the  way  in  which 
traders  write  the  history  of  co-operation,  taken  from  the  Commerical 
Journal  of  Amiens^  June  1st,   1897. 

"The  idea  of  co-operation  had  its  birth  under  the  cloudy  skies  of 
aristocratic   England. 

"About  sixty  years  ago  a  group  of  workmen  founded  the  first  co- 
operative  society   under   the   direction   of   several   clergymen. 

"The  powerful  British  industrialists  saw  in  it  a  very  practical  means 
of  keeping  the  workmen  under  their  thumbs,  and  they  subscribed 
largely  to  these  growing  societies.  The  idea  very  quickly  penetrated 
to  the  continent  and  imperial  France  opened  wide  its  doors  to  it.  At 
the  present  time,  co-operative  societies  spring  into  existence  so  rapidly 
that  they  are  a  source  of  anxiety  to  all  lovers  of  liberty  and  social 
well-being. 

"And,  what  will  ensue  if  this  goes  on?  It  is  easy  to  foretell.  It 
will  mean  the  advent  of  a  regime  similar  to  that  under  which  our 
neighbours  across  the  Channel  live,  where  we  can  see  every  day  work- 
men bowed  with  years  and  infirmity  holding  out  supplicating  hands 
to  the  rich  industrialists,  who  throw  thenj  coppers  from  their  gilded 
coaches." 

Hi 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     175 

This  question  has  often  served  as  a  platform  in  elec- 
tioneering contests,  particularly  in  municipal  elections.  In 
Paris,  at  the  time  of  the  municipal  elections  of  1910,  the 
socialists  suffered  a  relative  defeat,  which  they  attributed 
— not,  perhaps,  without  reason — to  the  irritation  of  the 
traders  against  co-operative  stores.  M.  Jaures  wrote  as 
follows  in  "L'Humanite"  after  the  elections:  "The  small 
trader  has  always  regarded  the  custom  of  workmen  as  his 
special  prerogative.  In  his  opinion,  the  workmen  commit 
almost  a  theft  when  they  think  of  giving  this  custom  over  to 
their  co-operative  societies ;  therefore,  he  wished  to  punish 
them  by  letting  them  know  the  bitterness  of  defeat."  ^ 

(1)  Methods  of  Conflict 

The  methods  which  traders  employ  against  co-operative 
societies  are  not  of  the  most  honourable  kind.  There  is  the 
system  of  sale  on  credit,  particularly  for  the  working  class. 
There  is  either  a  system  of  a  "handover'*  to  the  middle- 
class  cooks,  sometimes  even  to  the  housekeepers  themselves, 
of  the  "sou  par  franc''  (a  halfpenny  in  the  shilling),  or  that 
which  has  become  a  recognized  institution  in  some  countries, 
particularly  in  Switzerland,  the  system  of  ** primes"  (pre- 
miums) and  "tinibre-rabais"  (discount  stamps),  which  aims 
at  outrivalling  the  dividend  of  the  co-operative  shops.  This 
system  consists  of  giving  each  customer  who  pays  ready 
money  a  token,  worth  ten  per  cent,  of  the  value  of  goods 
purchased,  wliich  may  be  tendered  in  payment  for  other 
goods.  This  is,  after  all,  only  a  caricature  of  the  Rochdale 
system.     This  method  of  advertisement  and  warfare  against 

1  Some  of  the  cities  in  the  United  States  are  peculiarly  afflicted  with 
the  number  of  small  tradesmen  who  belong  to  the  Socialist  Party 
and  who  demand  the  support  of  the  organized  workers  on  this  score. 
Thousands  of  such  petty  merchants  belong  as  well  to  co-operative  socie- 
ties and  all  too  often  serve  on  the  Boards  of  Directors.  The  Co- 
operative Credit  Unions  have  been  used  frequently  by  grasping  workers 
who  avail  themselves  of  such  credit  in  order  to  set  themselves  up  in 
business  for  private  profit! 


176     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

the  co-operative  societies  was  very  common  for  some  time, 
but  it  began  to  lose  ground  when  it  became  clear  that  it  of 
necessity  meant  either  the  exploitation  of  customers  or  the 
ruin  of  the  shopkeepers.  In  Switzerland,  there  are  what  al- 
most amounts  to  co-operative  associations  of  traders,  who 
have  united  for  the  distribution  of  these  "discount  stamps," 
each  member  undertaking  to  receive  them.  It  goes  without 
saying  that  they  arrange  among  themselves  to  raise  the 
prices  in  proportion  to  the  value  of  the  discounts.  How- 
ever, the  traders  find  in  this  system  a  means  of  fighting 
against  the  abuse  of  the  credit  system.^ 

But  they  do  not  stop  here,  often  they  have  recourse  to 
more  open  methods  of  warfare. 

The  shopkeepers  organize  a  boycott  of  the  societies,  that 
is,  they  undertake  among  themselves :  ( 1 )  To  break  off  re- 
lations with  manufacturers  or  wholesalers  who  sell  to  the 
co-operative  societies,  (2)  to  dismiss  any  of  their  employes 
who  belong  to  a  co-operative  society. 

In  1909,  the  Lausanne  bakers  forbade  the  millers  to  sell 
to  the  co-operative  societies,  under  penalty  of  exclusion  from 
the  markets.  The  same  thing  occurred  in  Sweden  with  the 
imanufacturers  of  margarine.  In  Scotland,  in  1897,  there 
was  a  great  fight  between  the  butchers  and  the  Scottish  Co- 
operative Wholesale  Society.  The  butchers  boycotted  all 
the  merchants  and  stock-raisers  who  supplied  the  co-opera- 
tive societies  with  meat,  and  extended  their  boycott  to  the 
United  States,  and  to  the  ships  which  carried  meat.  They 
even  succeeded,  with  the  assistance  of  the  Glasgow  Munici- 
pal Council,  in  shutting  the  public  abattoirs  against  the 
Wholesale,  in  order  to  prevent  it  from  carrying  on  slaugh- 
tering on  its  own  account.     However,  the  farmers  were  dis- 

2  The  'trading  stamp"  was  once  very  popular  among  merchants  in 
this  country,  but  when  the  practice  developed  to  such  an  extent  that 
dozens  of  companies  were  manufacturing  them  and  all  stores  carried 
them,  their  value  disappeared,  and  we  now  see  them  only  rarely. 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     177 

pleased  at  the  boycott,  and  tlie  only  result  of  this  campaign 
was  to  attract  a  large  number  of  new  adherents  to  the 
Wholesale  Society,  and  to  cause  the  raising  of  a  Co-opera- 
tive Defence  Fund,  which  immediately  received  £16,000  from 
the  British  societies. 

More  often  the  shopkeepers  appeal  to  the  Government 
and  demand  protection  against  the  co-operative  societies. 
This  is  achieved  by  some  of  the  following  methods,  which  are 
more  or  less  identical  in  every  country: — 

(1)  They  demand  in  the  first  place  that  co-operative 
distributive  societies  should  be  subject  to  all  trade  obliga- 
tions, and  should  be  liable  to  taxation  from  which  they  have 
been  exempted  hitherto,  as  not  being  formed  of  professional 
traders,  as,  for  instance,  the  dealers'  licence,  commercial 
jurisdiction,  bankruptcy  proceedings,  surveillance  from  the 
health  authorities,  examination  of  weights  and  measures,  &c. 
What  annoys  the  traders  most  in  these  exemptions  is  not  so 
much  the  inequality  of  the  money  charges  as  the  halo  of 
philanthropy  and  disinterestedness  with  which  these  exemp- 
tions surround  the  co-operative  societies,  and  which,  in  their 
opinion,  forms  a  very  valuable  advertisement. 

They  have  obtained  satisfaction,  however,  on  all  these 
points.  According  to  French  law  all  co-operative  societies 
formed  by  shares  are  subject  to  all  the  laws  and  customs  of 
ordinary  trade  (Art.  68  of  the  law  of  1867,  and  confirmed  by 
the  law  of  1893).  And,  as  regards  trade  licences,  equality 
of  the  co-operative  societies  with  the  traders  was  assured  by 
the  law  of  1905  (see  later).  Although  this  law  might  in 
justice  be  criticized,  we  have  always  held  that  co-operative 
societies  would  be  wise  to  accept  their  trade  licence  with  a 
good  grace,  not  only  that  they  may  have  freedom  of  action, 
but  also  because  the  public  would  always  look  upon  this  ex- 
emption as  a  privilege,  and  every  privilege  in  a  country  as 
jealous  for  equality  as  ours  is  a  cause  of  unpopularity  and 


178     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

consequent  weakness.     It  is  better  that  co-operative  societies 
should  fight  the  traders  on  equal  terms. ^ 

(2)  In  some  countries  they  demand  that  co-operative  so- 
cieties, even  those  which  are  subject  to  the  same  rules  and 
taxes  as  the  traders,  should  be  prohibited  from  selling  to  the 
public.  This  means  that  when  it  is  a  question  of  paying  the 
societies  would  be  on  an  equality  with  the  traders,  but  when 
it  concerns  selling  they  would  be  outside  the  pale  of  the 
common  law !  And  this  claim,  obviously  so  very  inequitable, 
has  been  recognized  by  German  law,  as  we  have  said  before. 
In  Hungary,  traders  have  demanded  not  only  that  co-opera- 
tive stores  may  not  sell  to  the  public,  but  also  that  they  may 
not  have  shop  windows  in  the  street,  so  as  to  deprive  them  of 
this  method  of  advertisement.  They  want  co-operative 
shops  to  be  hidden  away !  In  Hungary,  too,  they  demanded 
that  co-operative  stores  should  only  be  formed  with  the  com- 
mon and  unlimited  liability  of  all  the  members.  Of  course 
this  clause,  in  general  use  among  credit  societies,  would  not 
have  the  effect  of  rendering  the  consumers'  societies  weaker 
— quite  the  contrary!  But  the  traders  hoped  thereby  to 
frighten  and  turn  away  would-be  members.  At  any  rate, 
this  clause  would  be  absurd,  because  consumers'  societies,  un- 
like credit  societies,  are  scarcely  ever  insolvent. 

(3)  In  every  country  they  wish  to  prohibit  all  State 
officials  and  municipal  employes  from  belonging  to  co-opera- 
tive societies,  or  at  least  from  being  members  of  their  execu- 
tive committees.  The  argument  which  they  put  forward  is 
curious,  namely,  that  Government  employes,  being  paid  by 
the  taxpayers'  money  (and  consequently  in  part  by  traders' 

3  The  federal  laws  in  the  United  States  exempt  from  taxation  the 
surplus-savings  of  a  society  if  such  savings  are  rebated  to  the  mem- 
bers in  proportion  to  their  purchases.  Such  "profits"  as  a  society 
makes  on  sales  to  non-members  however,  or  such  surplus  as  is  not 
rebated  to  members, — these  are  subject  to  the  same  taxation  as  the 
profits  of  private  corporations.  The  taxation  laws  of  the  various 
states  do  not,  to  our  best  knowledge,  provide  any  exemption  for  co- 
operative societies. 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     179 

money),  have  no  right  to  bring  this  money  to  the  shops  of 
those  who  wish  to  do  away  with  traders!  So  the  feudal 
obligation  of  serfs  to  bring  their  corn  to  the  mill  or  to  the 
oven  of  their  lord  has  been  revived  in  favour  of  the  traders. 

This  reasoning,  however,  has  not  up  to  the  present  con- 
vinced the  Governments,  which  in  France  and  Switzerland,* 
and  even  in  Grermany,  have  on  several  occasions  formally 
recognized  the  right  of  their  functionaries  (military,  police, 
customs,  post  office,  education,  &c.)  to  join  any  distributive 
society,  and  even  to  take  part  in  its  tidministrative  councils. 

However,  in  various  countries — Grermany,  Switzerland, 
France — public  offices  have  lent  a  complacent  ear  to  these 
claims,  and  have  prohibited  officials,  if  not  from  joining  a 
co-operative  society,  at  least  from  belonging  to  the  executive 
committee,  giving  as  a  reason  that  the  exercise  of  a  trade  is 
not  compatible  with  a  public  office,  and  that  it  might  even 
prove  for  certain  classes  of  employes  (such  as  customs, 
excise,  &c.)  a  temptation  to  misuse  their  functions  in  favour 
of  their  co-operative  societies. 

Meantime,  the  co-operative  stores  in  every  country  have 
protested  vehemently,  and  by  addressing  their  complaints 
to  high  authorities,  have  generally  won  their  case.  If  it  is 
indeed  a  regulation  that  an  official  may  not  indulge  in  com- 
merce, it  is  because  his  time  belongs  to  the  State;  but  he 
is  not  forbidden  to  be  a  shareholder,  or  even  a  director  of 
a  railway,  or  of  a  mining  company,  or  of  a  credit  bank. 
Then  why  should  he  not  also  be  a  member  of  simple  co-opera- 
tive societies,  even  though  they  sell  to  the  public? 

Undoubtedly  the  late  war  will  have  the  effect  of  definitely 

•  Author's  Note.  This  was  by  an  order  of  the  Federal  Council  of 
the  12th  February,  1901.  In  Switzerland,  the  Federal  Government, 
under  the  influence  of  the  traders,  forbade  employes  of  the  Post 
Office  or  the  Customs  to  take  office  on  the  executive  committees  of 
co-operative  societies  for  fear  they  might  be  suspected  of  certain 
abuses  of  confidence  in  the  exercise  of  their  duties.  But  under  pres- 
sure of  public  opinion  this  measure  was  not  kept  in  force. 


180     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

putting  an  end  to  this  campaign,  because  in  the  bdligerent 
countries,  and  even  in  Germany,  the  Government  i»  only 
anxious  to  take  away  all  restrictions  in  the  matter  of  officials 
joining  co-operative  societies. 

(4)  Sometimes  traders  have  pushed  their  extravagance  a^ 
far  as  to  demand  that  every  one,  except  workmen,  should  be 
prohibited  from  joining  a  co-operative  society,  or  at  least 
that  the  power  of  purchasing  should  be  limited  to  the  modest 
sum  of  £32  *  for  each  member.  Others  demand  that  the 
formation  of  federations  for  purchase  should  not  be  per- 
mitted to  co-operative  societies.  But  the  Chamber  of  Arts 
and  Crafts  of  Hanover  took  the  palm  in  the  way  of  demands 
when  in  1912  it  requested  that  the  creation  of  any  co-opera- 
tive society  "should  be  made  dependent  upon  proof  of  the 
necessity  for  its  existence."  * 

(2)  Result  of  the  Conflict 

It  is  a  remarkable  fact  that  during  this  conflict  public 
opinion  is  generally  in  favour  of  the  traders,  or  at  least  of 
the  petty  traders,  who  are  more  directly  affected  by  the 
competition  of  co-operative  stores.  People  say:  "What 
will  become  of  them  when  co-operation,  by  its  development, 
will  have  superseded  them  ?     Are  the  advantages  to  be  gained 

*  Author's  Note.  In  a  memorandum  presented  to  the  Senate  by  the 
"Syndicat  de  l' Alimentation  parisienne"  during  the  debate  on  the  law 
concerning   co-operative   societies. 

In  Germany  the  Union  of  Discounting  Societies  demanded  that  co- 
operative societies  should  be  forbidden  "to  pursue  any  objects  of 
public   utility." 

4  Some  other  methods  used  by  the  private  merchants  in  their  war- 
fare an  the  co-operatives  are: — display  of  enticing  "special  bargains," 
several  merchants  sometimes  uniting  in  such  a  campaign  so  as  the 
better  to  cut  prices  on  a  large  number  of  commodities;  bribery  of 
salesmen  to  induce  them  to  sell  to  the  co-operatives  at  a  higher  price 
or  to  give  a  poorer  quality  of  goods;  the  spreading  of  malicious  ru- 
mours throughout  the  community  so  as  to  create  distrust  of  the  manager 
of  the  co-operative  store;  in  some  cases  actual  bribery  of  the  manager 
himself,  when  this  man  is  not  a  co-operator  at  heart,  inducing  him 
to  ruin  the  business  by  oqe  form  or  another  of  sabotage. 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     181 

by  consumers  such  as  make  it  worth  while  ruining  millions  of 
people  who  form  the  bulk  of  the  middle  classes  ?"  Recently 
in  the  Town  Council  of  Manchester — the  city  par  excel- 
lence of  free  trade — during  a  debate  on  the  taxation  of  co- 
operative societies,  one  of  the  councillors  declared  that  the 
development  of  co-operation  "would  be  the  ruin  of  the  city," 
and  another  said  that  co-operation  was  "preparing  to  prac- 
tise a  most  crushing  tyranny."  These  questions  can  be  an- 
swered as  follows: — 

(1)  That  the  same  complaint  has  been  hurled  in  all  times 
against  all  forms  of  economic  progress — against  railways, 
against  machinery,  against  large  banks,  against  trusts,  and 
above  all  against  large  shops.  But  it  ought  to  be  under- 
stood that  all  economic  progress  aims  at  doing  away  with  a 
certain  amount  of  superfluous  labour,  and  at  the  same  time 
rendering  useless  those  who  performed  this  labour.  There 
are  in  France  two  millions  of  traders,  as  against  16  millions 
of  producers,  agricultural  and  industrial  (workmen  or  mas- 
ters); this  means  that  the  service  of  distribution  of  goods 
actually  finds  employment  for  one  man  in  nine.  It  is  clear 
that  if  a  system  can  be  found  which  will  do  the  same  service 
with  one  man  in  a  hundred  it  will  be  progress  worthy  of  con- 
gratulation. Those  who  are  freed  are  thus  enabled  to  un- 
dertake occupations  more  productive  than  the  breaking-up 
of  sugar,  for  example. 

(  2  )  That  shopkeepers  are  only  servants  of  the  public.  At 
the  same  time,  the  luxury  of  keeping  a  large  number  of  serv- 
ants is  a  very  expensive  one,  and  one  which  is  becoming 
more  and  more  discredited;  it  is  therefore  clear  that  the 
number  of  paid  intermediaries  should  be  reduced,  especially 
by  the  middle-classes.  An  Englishman,  John  Watts,  said, 
"It  is  a  strange  thing  that  the  poor  have  the  largest  num- 
ber of  servants,  and  must  pay  for  them!  If  the  people 
wish  to  become  rich,  the  first  thing  is  to  get  rid  of  these." 
We  shall  see  (Chapter  XVI)  tliat  co-operative  societies  only 


182  CONSUMERS'  CO-OPERATIVE  SOCIETIES 
require  one  employe  for  about  forty  members;  this  shows, 
therefore,  some  degree  of  progress.  Co-operative  associa- 
tion is  the  only  means  whereby  the  consumer  can  realize  this 
economy,  by  doing  away  with  this  ruinous  domestic  expend- 
iture. Of  course,  those  who  are  thus  condemned  are  to  be 
pitied,  and  perhaps  more  particularly  in  this  matter  because 
shopkeepers,  in  spite  of  the  abuses  to  which  they  have  been 
forced — less  perhaps  by  the  desire  for  gain  than  by  the  pres- 
sure of  competition — constitute  an  interesting  class  of  so- 
ciety. They  stand  for  some  excellent  middle-class  virtues 
— independence,  self-help,  and  thrift.  They  are  the  off- 
spring, though  in  reduced  circumstances,  of  the  big  mer- 
chants who  have  been  one  of  the  factors  of  modern  civiliza- 
tion. From  the  political  and  social  point  of  view  they 
stand  midway  between  the  conservatism  of  the  farmers  and 
the  revolutionary  temperament  of  industrial  populations.'^ 
But  we  should  investigate  and  observe  whether  the  traders 
(independent  shopkeepers  and  individual  commercial  enter- 
prises) could  have  held  on,  even  had  the  co-operative  move- 
ment never  existed.  There  is  every  reason  to  believe  that 
they  would  have  been  eliminated  all  the  same,  only  that  their 
disappearance  would  have  been  to  the  profit  of  the  larger 
shops  and  establishments  with  district  branches.  This  state 
of  things  would  be  even  worse  for  those  who  interest  them- 
selves in  the  welfare  of  the  middle  classes  because  co-opera- 
tive societies  on  the  whole  support  the  middle  classes  rather 
than  exploit  them,  as  it  is  from  them  we  get  the  numerous 
small  shareholders,  those  who  are  too  small  to  become  per- 
sons of  independent  means,  but  not  too  small  to  have  an 
interest  in  property. 

8  It  is  a  significant  fact  that  one  can  go  before  any  kind  of  a  liberal 
or  radical  audience  and  berate  capitalism  or  condemn  the  system  of 
business  for  private  profit  so  long  as  one  deals  abstractly  with  those 
subjects;  but  few  speakers  can  get  away  so  easily  before  our  liberals 
(or  even  before  many  of  our  "radicals"  for  that  matter)  if  he  dare 
question  the  ethics  of  the  small  business  man,  the  retailer  in  his  little 
shop. 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     183 

And  if  it  were  a  collectivist  regime  which  was  driving  him 
out  the  death  of  the  petty  trader  would  be  more  certain 
still! 

For  the  rest,  it  does  not  appear  that  the  trade  of  the  co- 
operative societies  constitutes  an  imminent  peril  to  the  shop- 
keepers as  yet,  as  statistics  do  not  show  a  decrease  in  their 
numbers,  even  in  the  countries  and  towns  where  the  co-opera- 
tive movement  is  most  developed.*  But  what  about  the  fu- 
ture? 

If  the  struggle  were  only  between  co-operative  societies 
and  petty  traders,  its  issue  would  be  certain,  as  the  latter 
seem  to  be  utterly  condemned  by  economic  evolution  as  an 
expensive  mechanism,  as  a  wastage  of  time  and  exploitation 
of  the  consumer.  This  condemnation,  however,  should  not 
be  pronounced,  at  least  not  so  absolutely,  on  small  work- 
shops and  small  holdings. 

Perhaps,  too,  the  small  shopkeepers  would  be  able  to  de- 
fend themselves  better  if,  instead  of  decrying  co-operative 
association,  they  had  the  sense  to  utilize  it,  by  combining  for 
wholesale  purchase,  or  even  for  manufacture,  and  by  allowing 
their  customers  to  benefit  by  the  economies  they  were  thus 
able  to  effect.  As  a  matter  of  fact,  they  have  tried  to  do 
this.  In  various  towns  in  Germany  they  have  formed  pur- 
chasing establishments,  gigantic  warehouses,  from  which  to 
retail  their  goods  collectively.  And  in  Paris  itself,  in  the 
interests  of  the  grocery  trade  they  have  instituted  a  pur- 
chasing agency  in  common  and  have  built  an  enormous  whole- 
sale warehouse.  But  this  latter  enterprise  failed,  nor  have 
the  others  succeeded  any  better.     It  seems  that  there  is  a 

•  Author's  Note.  The  number  of  licensed  dealers  of  Class  C.  (which 
-  orresponds  very  nearly  to  small  trading)  increased  from  1,176,140,  in 
18.52,  to  1,477,851  in  1899,  which  represents  a  growth  of  more  than  a 
quarter  in  less  than  half  a  century.  But  the  increase  is  much  more 
striking  if  we  consider  the  large  towns,  and  it  is  the  same  abroad.  In 
B41e  there  was  In  1877  one  grocery  shop  per  522  inhabitants;  in  1900 
there  was  one  per  413  inhabitants — and  this  in  spite  of  the  existence 
io  Dik  q(  the  most  powerful  coosunxers'  society  in  Switserlandl 


184     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

natural   incompatibility  between   the   co-operative   and   the 
individualist  systems. 

But  the  large  retail  establishments  constitute  the  most 
formidable  adversary  of  the  co-operative  stores,  especially 
since  they  do  not  limit  themselves  to  trade  in  "novelties," 
but  are  now  taking  up  the  grocery  and  victualling  lines. 
However,  co-operative  stores  are  not  without  certain  very 
real  advantages  over  the  large  shops,  which  might  ensure 
their  success,  because,  while  offering  their  members  equal 
advantages  (cheapness,  cash  sales  at  fixed  prices,  economy 
in  time  for  the  purchaser  by  the  grouping  together  of  spe- 
cialties) they  are  free  from  the  grave  handicaps  of  the  large 
shops,  such  as  unnecessary  expenses  for  publicity,  for  ad- 
vertisements, catalogues,  shop  windows,  exhibitions,  sales, 
sales  on  approbation  and  other  inducements  to  expenditure, 
which  have  actuall}^  created  a  particular  form  of  criminal  pa- 
thology among  lady  customers,  which  is  called  "klepto- 
mania," the  mania  for  theft.  Perhaps  there  is  an  element  of 
pride  in  this  austerity  of  the  co-operative  shops,  and  in  their 
contempt  for  all  advertisement,  and  for  everything  which 
might  attract  the  public.  It  is  quite  obvious  that  the  ap- 
pearance of  the  streets  in  our  larger  towns  woud  suffer  badly 
were  their  brilliant  shop-fronts  to  be  replaced  by  the  sombre 
windows  of  the  co-operative  stores.  In  this  matter  a  reac- 
tion has  begun  in  England,  and  the  co-operative  stores  are  be- 
ginning to  decorate  their  windows.  If  the  co-operative  store 
wishes  to  become  the  shop  of  the  people  it  must  learn  to  make 
itself  attractive.  The  question  of  publicity  and  advertising 
is  at  present  being  aired  in  the  English  co-operative  press. 
There  is  reason  also  for  the  hope,  in  the  matter  of  relations, 
not  with  the  public,  but  with  their  employes  and  workers, 
that  co-operative  societies  will  not  sacrifice  the  interests  of 
these  latter  to  mere  cheapness,  as  the  large  warehouses  are 
often  tempted  to  do,  and  that  they  will  refuse  to  offer  for 
sale  articles  of  underclothing  which  may  mean  a  good  bar- 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     1S3 

gain  for  the  purchaser,  but  a  wage  of  Id.  an  hour  for  the 
workwoman  who  has  stitched  them.  Let  us  add  that  it  is 
better  to  see  the  co-operative  shops  helping  and  easing  the 
strain  of  life  for  a  large  number  of  small  shareholders  of  £1 
than  to  see  enormous  establishments  whose  function  is  to 
create  a  few  multi-millionaires. 

We  are  justified  then  in  believing  that  consumers'  co- 
operation would  enable  us  to  escape  from  the  alternative  to 
which  the  consumer  is  otherwise  exposed — either  to  continue 
to  support  the  expenses  of  the  out-of-date  mechanism  of 
small  trading,  or  to  submit  to  the  bondage  of  commercial 
feudalism. 

But  the  new  methods  of  commerce  are  somewhat  disquiet- 
ing for  the  future  of  co-operative  societies,  as  much  in  the 
food  as  in  the  "novelty"  line — we  mean  the  establishment 
with  branches,  which  might  be  called  the  "tentacular"  shop, 
as  Verhaeren  has  said  of  certain  towns.  In  France  there  are 
20,000  branch  establishments,  belonging  to  150  firms  only, 
which  are  doing  a  trade  of  £48,000,000.  Instead  of  concen- 
tration, the  new  form  is  extension ;  instead  of  waiting  for 
the  customer  to  come,  they  go  out  to  find  him  in  his  small 
town,  in  his  district,  in  his  village,  or  in  his  isolated  farm, 
by  employing  perhaps  the  permanent  shop,  perhaps  the  cara- 
van, or  perhaps  by  correspondence.  For  instance,  in 
France,  the  case  of  the  grocery  shop  called  The  Planters  of 
Caiffa,  which  had  thousands  of  tricycle  carts  going  through 
the  country. 

Under  this  new  system  some  of  the  advantages  of  concen- 
tration must  undoubtedly  be  sacrificed;  for  example,  the 
expense  of  rent  is  greatly  increased.  But,  on  the  other  hand, 
there  is  a  saving,  first  of  all  on  wages  and  salaries  (the  em- 
ployes being  replaced  by  responsible  managers,  who,  instead 
of  being  an  expense,  bring  in  more  money  to  the  enterprise)  ; 
also  on  leakage  and  waste,  for  both  of  which  these  managers 
are  responsible ;  and  lastly,  on  the  expenses  of  advertising,  of 


186     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

catalogues,  &c.  The  manager  of  each  branch  must  deposit 
security,  which  is  utilized  in  the  funds  of  the  establishment 
and  is  often  retained  permanently  if  the  manager  does  bad 
business  and  is  obliged  to  quit,  in  wliich  case  he  is  replaced 
by  a  new  manager  who  furnishes  a  new  security. 

In  order  to  cope  more  effectively  with  these  formidable 
difficulties,  co-operative  stores  have  had  to  use  the  same 
weapons,  that  is,  to  multiply  their  branches,  with  managers 
responsible  for  each  (as  we  shall  see  later.  Chapter  XVI), 
but  not,  however,  without  doing  some  harm  to  the  co-opera- 
tive principle. 

But  must  the  struggle  end  in  the  extermination  of  one  or 
other  of  the  two  adversaries.''  Is  it  not  possible  to  effect  a 
reconciliation  between  them  ? 

Various  pacifists  have  suggested  solutions  to  this  end. 
One  method  which  has  been  proposed,  and  even  tried,  con- 
sists in  doing  away  with  the  co-operative  shop  and  of  dele- 
gating to  the  merchants  the  duty  of  supplying  the  associa- 
tions of  consumers.  The  function  of  the  latter  is  to  con- 
tract with  the  shopkeepers  in  the  name  of  the  members  of 
the  society  and  to  obtain  from  them  a  discount  as  advan- 
tageous as  the  society  itself  could  give,  offering  the  traders 
as  a  guarantee  the  loyalty  of  the  members.  Where  it  con- 
cerns consumers  who  look  only  for  economies  it  would  seem 
that  by  this  method  they  could  obtain  reductions  not  much 
inferior  to  those  they  might  realize  by  becoming  traders 
themselves  and  this,  moreover,  without  any  managerial  wor- 
ries or  risk  of  exploitation,  and  without  having  either  to 
open  a  shop  or  collect  capital.  In  short,  they  need  not  or- 
ganize themselves  into  a  "co-operative  society"  in  the  legal 
sense  of  the  word,  but  merely  into  a  "consumers'  league." 

This  system  has  been  tried,  notably  in  1901,  in  the 
"Cooperation  des  Families."  But  it  is  rather  military  clubs 
and  students'  associations  (which  have  nothing  in  common 
with  co-operation)  which  put  it  into  practice,  such  as  the 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     187 

Touring  Club  with  its  100,000  members.  The  Civil  Service 
Employees  of  the  Seine,  some  of  the  employes  of  the 
P.-L.-M.  Company,  that  of  (Jeneva,  &c.,  also  do  trade  with 
shopkeepers  for  certain  classes  of  goods  which,  for  some 
reason  or  other,  they  do  not  wish  to  stock  in  their  own 
stores,  i.e.,  meat  or  milk,  ready-made  garments,  or  medicines. 
Under  these  limited  conditions  this  system  might  be  useful, 
but  it  could  not  become  general  without  definitely  ruining 
co-operation.**  The  great  socialist  leader  .Taures  suggested 
another  method  of  compromise  in  an  article  in  UHumanite. 
It  was  that  the  workmen's  trade  unions  should  make  an  ar- 
rangement with  the  trader,  whereby  they  guarantee  the  pay- 
ment of  a  minimum  sum  for  purchases,  for  their  members. 
Thus,  the  traders,  having  an  assured  sale,  and  not  having  to 
run  the  risk  of  insolvency,  would  be  able  to  lower  their  prices 
and  to  sell  on  credit.  But  to  make  this  ingenious  system 
workable  it  would  first  of  all  be  necessary  that  the  trade 
unions  should  show  better  pecuniary  guarantees  than  they 
do  at  present.  On  the  other  hand,  what  traders  would  be 
chosen  as  suppliers  and  invested  thus  with  a  sort  of  mo- 
nopoly.'' 

In  fact,  co-operation  will  never  defeat  the  traders  until  it 
is  able  to  do  without  them. 

One  other  solution  (which  we  only  mention  here  as  a 
cariosity,  and  because  it  is  utterly  opposed  to  the  preceding 
one)  is  that  suggested  in  Camille  Sabatier*s  book  on  Mor- 
celUsme.     This  is  the  buying  up  of  the  private  shops  by  co- 

•  At  present  there  is  in  the  United  States  among  ex-service  men  an 
organization  through  which  these  men  can  buy  at  many  of  the  large 
stores  In  all  the  larger  cities  and  receive  substantial  discounts.  The 
Y.  M.  C.  A.  has,  in  years  past,  procured  the  same  benefits  for  its 
members.     Other  large  organizations  have  followed  this  plan. 

For  25  or  30  years  there  has  been  a  Consumers'  League  in  the  United 
States,  and  for  many  years  its  chief  concern  was  that  of  "white-list- 
ing" the  best  shops  or  putting  its  own  label  on  the  best  goods.  These 
activities  have  now  been  abandoned  years  since  and  the  League  con- 
cerns itself  primarily   with   legislative   welfare   work. 


188     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

operative  societies.  But  what  resources  would  they  have 
for  such  a  gigantic  operation?  They  could  do  so  by  setting 
aside  three-quarters  of  their  profits  for  this  purpose.  And 
to  help  them  the  State  would  allow  them  a  subsidy  which 
(suggests  the  author),  would  be  at  least  one-third  of  the 
profits,  until  the  deed  of  purchase  were  concluded.  Con- 
sumers' co-operative  societies  would  then  be  recognized  as 
useful  public  establishments,  and  be  subject  to  State  control, 
which  would  have  the  effect  of  greatly  increasing  their  pres- 
tige, and  their  credit.  It  is  hardly  necessary  to  remark  that 
if  this  purchase  could  be  effected  as  easily  as  the  author 
thinks,  it  is  not  at  all  likely  that  merchants  would  consent 
to  lend  themselves  to  it,  nor  that  they  would  allow  them- 
selves to  be  persuaded  that  it  would  be  better  to  sell  out  at 
once,  as  in  any  case  they  would  be  dispossessed,  perhaps 
without  any  indemnity.  Sabatier  tells  us  that  he  submitted 
his  scheme  to  a  small  referendum  of  grocers  in  Toulouse, 
where  he  lives,  and  the  majority  pronounced  in  its  favour. 
Without  contesting  this  fact  we  may  conclude  that  the  gro- 
cers whom  he  consulted  were  either  doing  very  poor  business, 
or  else  that  they  were  amiable  philosophers. 

Moreover,  even  admitting  that  they  were  willing  or  con- 
strained, the  annual  sum  available  for  the  purchase  would  be 
so  ridiculously  small — at  least  in  France — that  we  can 
hardly  estimate  the  number  of  centuries  necessary  for  the 
complete  realization  of  this  dispossession.  Also,  we  must 
consider  that  from  the  time  the  members  of  co-operative 
societies  found  themselves  deprived  of  their  full  dividends  it 
is  probable  that  they  would  desert  the  society  and  thus 
it  would  not  be  commerce,  but  co-operation,  which  would  find 
itself  suppressed. 

In  conclusion,  any  system  of  agreement  between  these  two 
methods  of  enterprise,  which  by  their  very  nature  are  an- 
tagonistic, appears  to  us  merely  chimerical.  But  what  is 
very  possible,  and  even  probable,  is  that  little  by  little  a 


CO-OPERATIVE  SOCIETIES  AND  TRADERS     189 

division  of  labour  will  be  effected  between  the  two ;  the  trader 
undertaking  the  function  of  satisfying  the  requirements  of  an 
individual,  temporary,  and  fanciful  character — things  which 
come  under  the  designation  of  "la  mode" — and  the  co-opera- 
tive stores  devoting  themselves  to  the  supplying  of  require- 
ments which  are  of  a  general,  homogeneous,  and  permanent 
nature. 


CHAPTER     XIII 

CAUSES      OF      SUCCESS      OR      FAILURE      OF 
CONSUMERS*    SOCIETIES 

Of  all  the  chapters  in  this  book  this  should  be  the  most 
important.  Unfortunately,  in  order  to  get  to  the  root  of 
the  matter  the  elaboration  of  a  complete  psychology  of  co- 
operation would  be  necessary,  and  this  would  be  a  task  far 
beyond  the  aim  of  this  little  volume,  and  for  which,  more- 
over, sufficient  information  is  lacking.  Frequently  we  see 
certain  co-operative  societies  developing  in  a  marvellous 
manner,  and  other  dragging  along  lamentably  and  failing, 
without  any  reasonable  explanation. 

In  France,  this  mortality  is  particularly  striking.  Sta- 
tistics of  consumers'  societies  published  annually  by  the 
Board  of  Labour  give  the  number  of  societies  which  have 
disappeared.  For  a  period  of  ten  years  (1904-1914)  the 
number  rises  to  802,  or  80  per  year,  which,  in  a  total  of 
2,500  societies  (average  of  their  number  between  1904  and 
1914)  would  represent  a  mortality  of  32  per  1,000,  being 
about  double  the  rate  of  normal  mortality  in  the  population. 
But  the  official  number  of  moribund  societies  is  very  much 
less  than  the  real  figure,  which  should  be  almost  doubled, 
showing  a  rate  of  mortality  of  60  per  1,000,  that  is,  an 
average  existence  of  from  16  to  17  years.  According  to  the 
Departmental  Reports,  the  number  of  births  of  societies  in 
this  period  would  be  1,457,  and  that  of  deaths  802.  But 
according  to  these  figures  the  number  of  increases  during 
this   period  would   only   be   655,   whereas   in   reality   there 

was  an  increase  of  1,326.     Therefore  the  trvie  figures,  both 

190 


CAUSES  OF  SUCCESS  OR  FAILURE  191 

for  deaths  and  births,  should  be  about  double  the  official  ones. 
It  is,  moreover,  easy  to  understand  that  many  societies  are 
completely  unknown.^ 

(1)  Administration 

Whenever  a  society  fails,  there  is  always  one  explanation 
ready ;  it  is  the  fault  of  the  management !  This  is  not  the 
only  explanation — there  are  so  many ;  but  it  is  true  that  this 
complaint  is  only  too  often  well  founded,  and  this  is  but 
natural.  In  the  first  place,  as  might  be  foreseen,  there  is 
the  incompetence  of  administrators  who  are  ill-suited  to  and 
not  fitted  for  business,  who  know  nothing  of  the  art  of  buy- 
ing at  the  right  time,  the  right  place,  &c.,  nor  the  method  of 
fixing  the  cost  price  and  the  retail  price,  nor  the  examination 
and  control  of  the  goods,  nor  book-keeping.  Of  course,  they 
employ  a  paid  manager  to  look  after  all  these  matters ;  but 
it  is  not  easy  to  find  a  trustworthy  employe,  particularly  in 
the  early  stages  of  the  working  of  a  society,  because  the 
capable  men  prefer  to  stay  on  in  secure  and  well-established 
houses  where  they  have  more  chances  of  advancement  and 
larger  salaries.  It  is  generally  only  such  men  as  are  not 
wanted  by  the  ordinary  trade  who  offer  themselves  to  the 
co-operative  societies,  so  that,  as  M.  Cernesson  aptly  ob- 
serves, managers  for  co-operative  stores  are  recruited  in  the 
wrong  way,  except,  of  course,  in  cases  where  societies  find  a 
man  with  combined  business  instincts  and  disinterested  phi- 
lanthropy— but  the  species  is  rare.  The  Revue  des  Detuc 
Mondes,  of  October  15th,  1908,  contains  an  article  by  Cer- 
nesson on  "Co-operative  Consumers'  Societies,"  in  which  will 
be  found  a  picturesque  description  of  the  co-operative  shops 

1  There  are  no  figures  available  for  the  United  States  which  show  us 
the  mortality  rate  among  co-operatives.  The  rate  is  high  here,  but 
probably  no  higher  than  it  was  in  most  European  countries  before 
the  movement  was  well  established  and  national  unions  and  whole- 
sales were  set  up  to  support  the  Infant  societies  until  they  could  stand 
alone   (if  they  chose). 


192     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

in  the  region  of  Paris,  in  which  these  faults  of  management 
are  clearly  set  forth.  And,  even  admitting  that  the  society 
finds  a  capable  or  passable  manager,  there  is  always  the  fear 
that  his  work  will  be  hindered  by  the  meddling  surveillance  of 
the  committee  members,  who,  actuated  probably  by  the  worthy 
motive  of  taking  their  duties  seriously,  interfere  in  and  out  of 
season,  often  with  disastrous  consequences.  If,  as  happily 
occurs  sometimes,  the  efficiency  of  the  manager  is  clearly 
shown  by  his  capability,  his  experience,  his  services  to  the 
society,  there  is  always  the  danger  that  sooner  or  later  an 
opposition  party  to  him  will  arise  which  will  watch  all  his 
actions  unfavourably,  denounce  his  despotism,  and  finally  get 
him  dismissed.  We  have  ourselves  known  the  case  of  the 
manager  of  a  society  who  had  worked  for  twenty-five  years 
with  extraordinary  success,  resulting  in  enormous  dividends, 
having  to  resign  on  account  of  calumnious  insinuations  which 
no  one  believed,  but  which,  nevertheless,  gave  a  sufficient  pre- 
text for  putting  an  end  to  a  reign  which  was  deemed  to  be 
too  long,  so  as  to  make  room  for  some  person  eager  to  re- 
place him — for  there  are  such,  even  in  co-operative  societies  !  ^ 
John  Stuart  Mill  wrote :  "The  ideal  of  democracy  is  that 
the  people  shall  be  masters,  but  employ  servants  more  ca- 
pable than  themselves."  This  is  precisely  the  ideal  of  a  co- 
operative consumers*  society;  but,  unfortunately,  it  is  not 
eas}'^  to  realize.  We  are  thrown,  as  it  were,  between  the  two 
rocks  of  Scylla  and  Charybdis.  On  the  one  hand,  it  is  de- 
sirable and  even  indispensable  that  every  person  in  the  as- 
sociation, administrators  as  well  as  ordinary  members,  should 
take  an  active  part  in  the  life  of  the  society,  even  if  the  latter 
only  do  so  by  objecting  when  they  are  not  satisfied,  and  by 
being  present  at  meetings ;  it  is  essential  that  they  should 

2  This  often  happens  in  American  societies,  too,  but,  on  the  whole, 
our  movement  is  younger  and  the  pioneer  spirit  is  still  active  nearly 
everywhere.  More  of  our  failures  are  due  to  poor  management,  igno- 
rance on  the  part  of  the  directors,  or  lack  of  educational  work  among 
the  members. 


CAUSES  OF  SUCCESS  OR  FAILURE  193 

feel  that  the  society  belongs  to  them.  And  on  the  other 
hand,  they  should  not  shackle  the  management  by  undue  in- 
terference. It  ought  to  be  possible  to  reconcile  these  con- 
tradictory elements  by  establishing  a  well  regulated  division 
of  labour,  a  separation  of  control  and  execution,  various 
members  undertaking  these  functions  in  rotation;  but  even 
thus  a  great  deal  of  tact  and  goodwill  is  necessary  to  make 
everything  work  smoothly  {see  Chapter  xvi,  The  Employes 
and  Workmen  in  Co-operative  Societies). 

The  very  constitution  of  a  co-operative  society  as  created 
by  law  and  the  nature  of  things  (i.  e.,  a  society  of  shares)  is 
bound  to  make  good  management  difficult.  These  difficulties 
already  exist  in  large  capitalist  companies,  obviously  inferior 
to  individual  enterprise  from  the  point  of  view  of  initiative 
and  control,  but  they  become  much  more  serious  in  a  co- 
operative society.  In  capitalist  companies  the  executive 
committee  is,  as  a  matter  of  fact,  omnipotent,  if  it  were  only 
because  it  often  owns  the  large  majority  of  the  shares. 
They  only  have  one  annual  general  meeting,  the  shareholders 
do  not  attend  in  any  numbers — indeed,  in  some  companies 
only  the  large  shareholders  are  admitted — ^they  very  seldom 
speak,  and  when  they  do  they  get  little  or  no  satisfaction 
from  the  chairman. 

Co-operative  societies,  on  the  contrary,  are  genuine 
miniature  parliamentary  republics,  in  which  there  are  nearly 
always  two  parties,  the  one  in  power,  and  the  opposition; 
and,  naturally,  the  latter  tries  to  upset  the  former,  or  at 
least  to  prove  it  in  the  wrong.  At  every  general  meeting 
— and  there  are  at  least  two  a  year — there  are  numerous 
and  vehement  accusations,  particularly  if,  for  some  reason, 
the  profits  have  decreased.  We  do  not  mean  to  assert  by 
this  that  there  is  great  enthusiasm  among  the  members  about 
attending  the  meetings — there  are  societies  with  20,000 
members,  of  whom  only  some  300  or  400  come  to  the  general 
meetings — but  it  is  precisely  the  turbulent  ones  who   are 


194.     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

most  assiduous.  And  it  is  all  the  more  difficult  to  maintain 
order  in  discussion  because  the  chairman  of  the  meeting  is 
almost  always  ignorant  of  the  administration  of  the  society, 
being  elected  by  the  most  energetic  canvassers  of  some  name 
or  other.  Thus  it  happens  that  very  delicate  questions,  and 
even  a  complete  policy  which  has  been  slowly  and  carefully 
built  up  by  degrees,  may  be  left  to  the  mercy  of  an  absolutely 
blind  vote.*  ^ 

*  Author's  Note.  "Complaints  increase,  questions  and  challenges  of 
various  kinds  are  interchanged.  .  .  .  There  comes  a  time  when,  tired, 
worn  out,  the  mass  of  the  people  is  incapable  of  doing  any  business, 
no  matter  how  important  it  may  be,  perhaps  the  revision  of  rules, 
loans,  or  the  building  of  some  property.  Dinner  hour  is  passed,  the 
housekeepers  have  gone  away,  and  cries  of  protestations  arise,  both 
jocular  and  vehement.  Dinner!  .  .  .  And,  like  an  irresistible  water- 
spout, deaf  to  the  entreaties  of  the  authorities,  this  mass  surges  out- 
side, heedless  of  the  demoralization  it  leaves  behind  amongst  the  level- 
headed co-operators  and  the  personnel  embittered  by  humiliations 
suffered."     (Cernesson;  article  cited  above.) 

According  to  Cernesson,  in  the  article  quoted,  in  the  Parisian  Work- 
men's Co-operative  Societies,  "No  one  can  be  a  candidate  (for  the 
executive  council)  if  he  has  not  made  an  official  declaration  of  candida- 
ture— an  ingenious  method  of  eliminating  modest  ones.  .  .  .  On  his 
name  being  called,  each  one  must  rise,  mount  the  platform,  and  him- 
self expound  his  qualifications  as  administrator.  ...  It  is  easy  to 
conceive  that  under  such  conditions  the  influx  of  serious-minded  can- 
didates will  not  be  great — and  in  fact,  there  are  often  empty  places 
which  have  to  be  filled  by  drawing  lots.  In  the  society  la  ProUtarienne, 
at  Montmartre,  drawing  lots  by  a  wheel  of  fortune  is  practised  reg- 
ularly according  to  the  rules  for  the  choosing  of  a  certain  number 
of  the   executive." 

3  In  the  United  States  we  see  this  kind  of  thing  far  oftener  within 
the  labor  union  than  in  the  co-operative  society.  Such  factional  diifer- 
ences  develop  much  more  easily  in  the  organization  which  has  fewer 
actual  accomplishments  to  engage  it  and  is  therefore  compelled  to  live 
too  much  for  the  sake  of  future  hopes  or  mere  perfection  of  the  organ- 
ization machinery.  We  have  seen  many  of  these  bitter  internal  schisms 
in  labor  unions  or  in  political  organizations,  and  they  seem  to  be 
particularly  virulent   among  the  peoples   who   are   of   Latin   origin. 

Unfortunately  there  has  been,  since  the  advent  of  Communism  in  the 
United  States  and  the  resulting  cleavage  in  the  ranks  of  the  Socialists, 
a  conspicuous  exception  to  the  general  rule  mentioned.  The  Finnish 
societies  have  been  seriously  split  on  this  political  rock  in  the  major- 
ity of  the  communities  where  they  are  organized  co-operatively,  and 
the  co-operatives  have  suffered  accordingly. 


CAUSES  OF  SUCCESS  OR  FAILURE  195 

(2)  Overlapping 

We  have  already  remarked,  apropos  of  international 
statistics  of  co-operation,  that  herein  lies  one  of  the  most 
unfortunate  characteristics  of  French  co-operation — the 
number  of  societies  is  everywhere  larger  than  formerly ; 
but  it  is  obvious  that  when  we  see  in  one  town  (some- 
times a  very  small  one)  half-a-dozen,  indeed  up  to  twenty 
co-operative  stores,  it  is  a  sign  of  weakness  and  not  of 
strength  to  the  movement.  This  overlapping  has  the  very 
natural  result  that  all  the  societies  are  eager  to  secure  new 
members,  thereby  reviving  all  the  evils  inherent  in  competi- 
tion, which  co-operation  by  its  very  title  is  seeking  to 
abolish.  It  is  inevitable  that  societies  should  aim  at  attract- 
ing new  members,  whether  by  swelling  the  dividends  or  by 
lowering  prices — two  inverse  tendencies,  equally  undesirable ; 
add  to  these  the  increase  of  general  expenses,  whether  it 
be  due  to  the  multiplicity  of  premises  rented  and  of  employes 
whose  time  is  wasted  in  looking  after  rare  customers,  or 
whether  it  is  by  the  delivery  of  goods  to  customers'  houses. 

In  this  respect,  we  often  see  three  or  four  vans  in 
the  same  town  overlapping  each  other  in  delivering  goods 
to  the  various  members,  where  one  cart  would  be  all  suffi- 
cient. Thus,  the  general  expenses,  according  to  Cerncsson, 
amount  to  13  per  cent,  on  the  sales  in  Parisian  societies, 
while  they  do  not  exceed  8  per  cent,  in  English  ones.  Add 
also  to  this  that  it  is  already  a  difficult  enough  task  to  find 
in  the  same  locality  enough  capable  men  to  form  an  efficient 
executive  committee,  and  it  is  then  highly  improbable  that 
good  working  committees  could  be  found  for  so  many  over- 
lapping societies.  The  3,200  consumers'  societies  in  France 
require  a  personnel  of  from  30,000  to  40,000  administrators. 
Where  are  these  to  be  found? 

This  state  of  things  arises  principally  from  the  French 


196    CONSUMERS'  CO-OPERATIVE  SOCIETIES 

character,  which  loves  division,  and  it  obtains  not  only  in 
the  small  co-operative  world,  as  it  is  the  same  in  friendly 
societies  and  in  all  French  associations.  But  in  the  co-opera- 
tive movement  this  characteristic  is  accentuated: — 

(a)  By  the  tendency  to  form  professional  co-operative 
societies.  Thus  we  see  in  many  towns  a  co-operative  store 
for  railway  employes  next  door  to  the  ordinary  one ;  we  may 
even  see  (if  the  town  is  large  enough  to  have  two  large 
railway  companies),  one  store  for  the  emplo3'es  of  the 
P.-L.-M.  and  another  for  those  of  the  Midi.  Sometimes  to  be 
merely  professional  is  not  sufficient  for  co-operative  societies 
— they  must  sub-divide  into  special  departments.  So  we  see 
at  Avignon  two  or  three  co-operative  societies  for  the 
P.-L.-M.,  including  one  for  the  traction  department  and 
another  for  the  trade  staff. 

(b)  By  the  introduction  of  politics,  religion  or  socialism 
into  the  societies.  This  has  occasioned  severe  censure  on 
us  from  other  countries,  such  as  that  recently  pronounced 
by  Mr.  Mclnnes,  a  member  of  the  Central  Committee  of  the 
International  Co-operative  Alliance:  "France  is  the  only 
country  which  does  not  show  the  wished-f or  progress ;  but 
any  one  who  is  familiar  with  the  co-operative  movement  in 
this  country  will  know  how  very  greatly  it  is  split  up  by 
politics  and  religion."  Where  a  society  openly  sets  up  the 
red  flag,  the  inevitable  result  is  that  those  who  do  not  ap- 
prove of  this  will  start  another  society.  In  the  large  towns 
in  Belgium  there  are  often  two  distinct  societies,  the 
socialist  and  the  Catholic,  sometimes  even  a  third,  the 
Liberal.  In  the  large  industrial  French  towns  in  the  depart- 
ment of  Nord,  "red"  and  "yellow"  stores  are  to  be  seen 
facing  each  other  with  alternating  power.  But  we  shall 
leave  this  important  question  of  the  introduction  of  politics 
into  the  co-operative  movement  to  another  chapter. 

(c)  By  the  specialization  of  societies — some  limiting  their 


CAUSES  OF  SUCCESS  OR  FAILURE  197 

activities  to  baking,  others  to  the  sale  of  groceries,  and 
others  to  the  sale  of  wines,  &c.  In  this  way  there  would 
have  to  be  as  many  shops  as  specialties. 

As  a  reaction  against  this  tendency  the  societies  in  any 
one  town  should  be  induced  to  unite  as  the  English  ones 
do,  which  explains  the  phenomenon  already  alluded  to  on 
page  56,  namely,  that  the  number  of  societies  is  diminishing, 
while  that  of  the  members  is  rising  steadily. 

In  Germany,  it  is  by  this  system  of  amalgamating  the 
existing  societies  in  the  same  town  tliat  they  have  been  able 
to  create  the  colossal  societies,  of  which  we  have  spoken 
elsev/here.  They  are  only  at  the  beginning  of  this  method  in 
France,  and  are  meeting  with  active  resistance  from  socie- 
ties, which  the  smaller  they  are  persist  so  much  the  more 
in  maintaining  their  independence,  perhaps  from  some  feel- 
ing of  pride.  Each  society  has,  of  course,  its  own  little 
history  and,  after  all,  it  is  pleasant  to  be  among  one's  own 
friends. 

For  the  rest,  it  would  be  very  imprudent,  where  this 
amalgamation  has  taken  place,  to  proceed  by  closing  all 
shops  which  have  amalgamated,  with  the  sole  object  of 
reducing  general  expenses  and  of  concentrating  all  depart- 
ments into  one  large  bazaar;  the  remedy  might  be  worse 
than  the  disease.*  The  building  of  this  great  edifice  would 
either  absorb  all  the  society's  capital,  or  necessitate  a 
loan.  On  the  other  hand,  many  members,  finding  the  central 
shop  too  far  away  from  them,  might  leave  the  society.  The 
society  should  not  be  out  of  reach  of  the  members.  What  is 
required  is  one  management  but  with  branches  in  all  dis- 

•  Author's  Note.  It  is  a  generally  admitted  law  that  the  percentage 
of  general  expenses  varies  in  an  inverse  ratio  to  the  turnover,  and  this 
is  verified  in  practice,  but  only  to  a  certain  degree  of  expansion.  Be- 
yond this  point  the  law  is  reversed,  and  this  is  why  there  is  generally 
a  limit  to  the  growth  of  any  economic  enterprise,  which  should  not 
be  exceeded. 


198     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

tricts  where  there  is  an  adequate  nucleus  of  members.  The 
large  Parisian  society  has  330  branches,  and  that  of  Bale 
more  than  100. 

But  the  danger  of  centralization  is  not  all,  there  is  also 
the  danger  of  concentration  of  administration.  The  large 
societies  obviously  require  administrative  capacity  propor- 
tionate to  their  importance,  and  also  much  more  attention 
from  those  who  undertake  such  work.  They  also  offer  more 
temptations  to  dishonesty  and  more  difficulties  in  the  matter 
of  control ;  the  members  often  do  not  know  each  other. 

For  these  various  reasons  it  is  possible  that  complete 
amalgamation  should  be  deferred,  and  that  it  might  be 
wiser  to  be  content  with  abolishing  competition  by  effecting 
an  understanding  among  the  societies — a  cartel — each  one 
undertaking  to  limit  itself  on  some  pre-arranged  system,  to 
establish  the  same  rate  of  dividend  and  to  do  all  purchasing 
in  common.  During  the  war  the  movement  in  France  to- 
wards amalgamation  has  greatly  developed,  and  so  far  has 
given  good  results.  Still  we  do  not  think  that  the  advice 
given  in  the  text  is  not  wanted.  The  Union  du  Cooperateurs 
in  Paris,  which  is  the  result  of  the  amalgamation  of  a  dozen 
societies,  has  today  184  stores.  Now  it  is  attempted  to  set 
up  co-operative  societies  that  are  no  longer  local  but 
regional,  with  branches  in  places  where  they  respond  to  local 
needs.  The  reconstruction  of  the  co-operative  organization 
in  the  regions  of  France  which  were  destroyed  by  the  in- 
vasion is  the  special  work  which  will  be  done  by  the  regional 
societies. 

(3)  Character 

The  degree  of  moral  character  of  the  members  of  a 
co-operative  society  is  certainly  one  of  the  most  important 
factors,  if  not  the  most  important,  in  the  success  or  failure 
of  the  store — (Robert  Owen,  not  without  reason,  called  his 
system  "The  New  Moral  World").     It  is  important  for  th; 


CAUSES  OF  SUCCESS  OR  FAILURE  199 

members  of  committee,  because  morality  alone  can  preserve 
them  for  the  temptation  of  demanding  or  accepting  bribes, 
important  for  the  ordinary  members  because  this  moral 
sense  will  help  them  to  choose  honest  administrators,  because 
it  saves  them  from  internal  disputes  and,  finally,  because  it 
keeps  before  their  eyes  the  essential  duty  of  a  loyal  member, 
which  is  to  purchase  at  his  own  store — even  if  the  grocer's 
shop  is  more  convenient,  or  offers  such  and  such  an  article 
cheaper — and  to  participate  in  all  the  social  life  of  the 
society. 

But,  as  we  have  remarked  elsewhere  (page  85)  with 
regard  to  these  elementary  duties  of  solidarity,  the  members 
who  scrupulously  fulfil  them  are  rare. 

We  must  admit  that  if  the  co-operative  movement  in 
France  is  very  much  behind  that  of  other  countries, 
it  is  partly  because  the  standard  of  morality  in  co-operative 
societies,  even  though  generally  superior  to  that  of  ordinary 
trade,  is  not  yet  very  high.  It  is  not  rare  to  hear  of  socie- 
ties which  have  failed  through  the  shameful  practice  of  "com- 
missions" and  of  many  others  which  have  not  succumbed  to 
it  but  which  continue  to  foster  this  evil,  doing  nothing  to 
cure  it,  even  refusing  certain  remedies  such  as  adhesion 
to  purchasing  federations,  because  this  would  suppress 
the  evil  too  drastically.  Undoubtedly  it  is  a  great  danger 
for  workmen  who  have  never  had  more  money  than  their 
weekly  wage,  to  have  to  deal  with  a  business  of  thousands  or 
millions  of  francs.  Besides,  it  is  an  easy  and  insensible 
descent  from  the  small  innocent  present  made  by  the  whole- 
sale traders  in  the  shape  of  a  box  of  oranges  for  madam,  or 
some  bon-bons  for  the  children,  to  so  much  per  cent,  offered, 
and  at  times  even  impudently  demanded,  on  each  purchase. 
These  wholesalers  and  their  representatives  are  very  clever 
in  playing  the  role  of  tempters.  And  we  must  remember,  too, 
that  commissions  are  customary  in  trade,  and  it  is  difficult  to 
'^'i    *    the  line  of  demarcation  between  the  lawful  commission 


200     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

which  will  benefit  the  society  and  the  unlawful  one  which  is 
put  in  the  pocket.  As  an  illustration  to  this  chapter  We 
should  mention  the  melancholy  history  of  the  society  "la 
MoissonetLse,"  founded  in  1875,  in  the  faubourg  Saint- 
Antoine,  Paris,  exclusively  of  workmen,  which  had  16,000 
members,  and  which  succumbed  in  1903  owing  to  the  mal- 
practices and  the  vices  of  the  executive  committee.* 

Consumers'  co-operative  societies  which  have  in  their 
ranks  employes  of  public  services  (such  as  post  office  and 
telegraphic  officials),  professors  of  colleges  or  of  academies, 
soldiers,  small  householders — in  a  word,  what  we  call  the 
middle  classes — are  generally  more  free  from  this  evil, 
because  the  members  know  each  other  better,  and  because 
of  the  habit  they  have  acquired  in  their  profession  of  keep- 
ing accounts  and  managing  money  keeps  them  better 
on  guard  against  temptation.  We  do  not  at  all  wish  to 
say — far  from  it — that  the  workman's  morality  is  naturally 
inferior  to  that  of  the  middle  classes,  because,  on  the  con- 
trary, it  is  from  the  latter  that  workmen  have  learned  the 
practice  of  bribes ;  but  we  contend  that  where  middle  classes 
and  workmen  are  associated  in  the  same  society  they  feel 
themselves  under  observation  by  each  other  and  strive  to 
behave  well  for  the  honour  of  their  class.  We  cannot  help 
regretting,  therefore,  from  the  point  of  view  of  successful 
business  working,  the  exclusion  of  the  non-labour  element 
from  the  socialist  societies.     In  any  case,  this  is  one  proof 

4  Such  practices  are  not  common  to  the  American  societies,  although 
there  are  too  many  failures  that  can  be  attributed  in  part  to  such 
causes  in  general.  Many  of  the  Societies  which  have  had  their  origin 
in  a  mere  desire  for  money-saving  alone  have  begun  their  descent  to- 
ward failure  by  granting  various  fees  to  officers  and  directors.  Com- 
missions to  the  manager  can  easily  be  justified  in  such  a  society;  and 
soon  there  is  a  scramble  under  way  among  the  leaders,  each  of  whom 
wants  to  profit  more  than  the  others.  It  is  well  that  such  societies  are 
very  short-lived.  Some  of  them  have  been  saved  by  the  more  honest 
and  intelligent  of  the  members  who  succeed  in  having  the  old  Board 
of  Directors  thrown  out,  a  new  manager  installed,  and  true  co-opera- 
tive principles  put  into  practice.  '^    ^^^' 


CAUSES  OF  SUCCESS  OR  FAILURE         201 

more  of  the  need  for  co-operative  education,  as  we  have 
already  remarked  {see  page  93). 

Moreover,  when  we  speak  of  morality  as  a  factor  of 
success  or  failure,  this  word  must  not  only  be  understood  in 
the  narrow  sense  of  honesty.  We  must  understand  by  it 
everything  which  strengthens  the  feeling  of  co-operative 
solidarity,  everything  which  develops  zeal  in  the  members 
of  a  society  to  fulfil  their  duties  as  such,  beginning  by  loyalty 
in  their  daily  purchases.  Even  in  English  co-operation 
there  is  a  matter  far  from  gratifying,  which  is  occupying 
the  attention  of  the  leaders  of  the  movement.  For  thirty 
years  the  average  of  purchases  made  per  member  has  re- 
mained stationary,  and  this,  be  it  noted,  notwithstanding 
two  things  which  should  have  raised  it  considerably,  to  wit, 
the  rise  in  wages  and  the  rise  in  prices.  The  present  state 
of  things  is,  therefore,  a  retrogression.^ 

The  causes  of  inferiority  which  we  have  just  indicated 
do  not  apply  in  the  same  degree  to  co-operative  societies  in 
every  country;  the  situation  in  English,  German,  and  Swiss 
societies  appears  to  be  mucli  better.  Although  the  practice 
of  illegal  commissions  has  sometimes  been  touched  upon 
in  English  co-operative  papers,  although  it  has  often  been 
denounced  by  traders  (who  are  somewhat  open  to  suspicion 
as  witnesses)  we  may  say  that  it  is  very  rare,  and  it  is 
severely  repressed  both  by  law  and  by  custom.  There  is 
a  special  law  called  the  "Bribery  and  Corruption  Act," 
August  4th,  1906,  which  enacts  that  any  employe  who  ac- 
cepts secret  commissions  can  be  dismissed  without  any  in- 
demnity, and  that  the  bargain  corrupted  by  any  such 
commission  may  be  rendered  null  and  void. 

And  here  we  are  led  to  investigate  the  general  causes 

s  In  the  face  of  the  competition  offered  by  the  cut-price  chain  stores 
and  the  other  stores  which  give  unlimited  credit,  the  co-operative  in 
the  U.  S.  must  put  its  chief  reliance  in  Education,  convincing  tlie 
membership  generally  that  despite  all  appearances  to  the  contrary, 
private   business  cannot   do   for   them  what   co-operation  can. 


202     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

which  can  be  separated  from  the  contingencies  vhich  govern 
particular  cases. 

(4)  Race 

Race,  or  at  least  the  admixture  of  factors  designated  by 
this  somewhat  indeterminate  word,  exercises  an  undoubted 
influence  on  the  co-operative  movement.  As  proof  of  this, 
we  need  only  compare  the  Anglo-German  countries  on  the 
one  hand,  with  the  Latin  countries  on  the  other,  looking  back 
on  the  table  we  gave  (page  49).  It  will  be  seen  that  while 
for  Great  Britain,  Holland,  German}^,  Austria,  and  the  four 
Scandinavian  countries  (Finland  included),  the  proportion 
of  co-operators  to  that  of  the  total  population  is  an  average 
of  131  per  1,000;  in  France,  Belgium,  Italy,  Spain,  and 
Portugal,  it  is,  on  the  contrary,  only  65  per  1,000,  just 
half. 

But  here  is  a  more  striking  proof,  because  it  deals  with 
the  inhabitants  of  the  same  country,  and  thereby  many  dis- 
turbing factors,  such  as  inequalities  of  civilization,  educa- 
tion, wealth,  &c.,  may  be  almost  eliminated;  let  us  look  at 
Switzerland.  In  the  German  cantons  the  proportion  of 
co-operators  in  relation  to  the  population  is  about  7  per  100 ; 
in  the  five  Latin  cantons  (four  French:  Geneva,  Vaud, 
Neuchatel,  Fribourg;  one  Italian:  Tessino)  it  is  3  per  100. 
In  the  same  way  the  Flemish  provinces  in  Belgium  show  a 
great  superiority  to  the  Walloon  provinces,  though  less  than 
in  Switzerland.  However,  co-operation  seems  to  make  the 
most  rapid  progress  in  the  "Romanic^'  cantons,  so  that  the 
proportion  is  becoming  more  equal.  Thus,  in  the  last  edi- 
tion of  this  book  (1910)  we  remarked  the  fact  that  the  co- 
operative newspaper  in  the  French  language  had  only  17,000 
subscribers  as  against  123,000  for  the  same  in  the  German 
language,  which  meant  a  proportion  of  1  in  7.  Then  in 
1914  the  number  of  subscribers  to  the  newspaper  in  the 


CAUSES  OF  SUCCESS  OR  FAILURE         203 

French  language  rose  to  59,000,  and  that  to  the  newspaper 
in  German  to  183,000,  which  gives  the  proportion  of  1  in  3, 
that  is,  more  than  that  of  the  two  languages  in  Switzerland, 
which  is  only  1  in  4. 

It  appears  obvious  from  these  figures  that  the  Anglo- 
Grermanic  race  possesses  exactly  the  virtues — perhaps  the 
faults  also — ^which  tend  most  to  the  success  of  co-operation; 
the  love  of  order,  the  respect  for  discipline,  the  spirit  ot 
solidarity,  the  passion  for  organization  which  helps  towards 
the  formation  and  the  leading  of  large  bodies  of  human 
beings.  Trusts  and  cartels  are  a  manifestation  of  this  same 
spirit. 

The  Latin  peoples  seem  to  be  more  endowed  than  we  are 
with  the  faculty  of  association.  Italians  have  shown  remark- 
able aptitude  for  co-operative  association,  particularly 
in  certain  forms.  What,  you  will  say,  is  Prance  then  not 
I^atin.''  By  language  and  civilization,  yes,  undoubtedly, 
but  not  by  blood.  She  is  of  Celtic  race,  of  Gaulish  blood, 
of  those  Gauls  whose  unruly  clans  Vercingetorix  himself 
could  not  unite  into  a  national  federation.  The  Irish  are 
our  nearest  relations  from  the  racial  point  of  view.  Now, 
if  we  compare  the  development  of  co-operation  in  Ireland 
with  that  of  the  United  Kingdom  we  shall  be  struck  by  the 
inferiority — at  least  as  far  as  concerns  the  form  of  co-opera- 
tion which  is  the  subject  of  this  study — consumers'  co- 
operation. Consumers'  co-operation  in  Ireland  only  had 
17,000  members  to  4,500,000  inhabitants — that  is  a  propor- 
tion less  than  4  per  thousand — while  in  England  they  run 
to  2,550,000  members  in  a  population  of  37,000,000  of  in- 
habitants, that  is  70  per  thousand.  True,  Wales,  which  is 
of  pure  Celtic  race,  and  Scotland,  which  is  partly  so,  have 
a  proportion  of  co-operators  equal  to  that  of  England,  but 
they  have  been  anglicized. 

Ireland,  though  poor  in  consumers'  societies,  is  rich  in 


204j     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

agricultural  producers'  co-operative  societies,  but  we  shall 
explain  later  on  (page  205)  that  this  form  of  co-operation 
implies  a  very  different  type  of  mentality. 

(6)  Ennnronment 

Environment  exercises  a  very  strong  influence  on  co- 
operation. An  industrial  district  is  much  more  favourable 
to  consumers'  co-operation  than  an  agricultural  one;  it  is 
almost  indispensable.  It  is  only  necessary  to  look  back  on 
the  table  already  mentioned  (page  49)  to  acknowledge  that 
the  development  of  co-operation  in  each  country  is  almost  in 
proportion  to  its  industrial  development.  In  Switzerland, 
the  three  largest  co-operative  stores,  of  from  20,000  to 
40,000  members,  are  in  the  three  industrial  centres,  Bale, 
Zurich,  and  Geneva.  In  France,  if  we  draw  a  line  of  demar- 
cation from  Lyons  to  Bordeaux  we  shall  see  that  an  immense 
majority  of  co-operative  consumers'  societies  are  in  the 
northern  half,  very  few  being  in  the  southern  part.  There 
are,  however,  large  and  important  towns  in  the  southern  di- 
vision, Toulouse,  Montpellier,  Nimes,  Marseilles,  Toulons, 
Nice,  but  the  industrial  movement  there  is  very  weak.  The 
explanation  of  this  is  simple.  The  industrial  populations, 
grouped  already  by  force  of  circumstances  in  their  common 
workshops  and  in  the  quarters  where  they  live,  are 
ripe  for  grouping,  as  in  a  trades  union  or  in  a  co-opera- 
tive society.  Moreover,  the  pressure  of  the  cost  of  living 
inclines  them  towards  co-operation.  Country  folk,  on  the 
contrary,  have  few  wants,  and  those  which  they  have  are 
easily  satisfied.  To  a  large  extent  they  are  provided  for  by 
the  produce  of  the  farm  itself,  and  the  rest  are  procured 
through  travelling  salesmen.  Country  folk  have  either  no 
time  to  go  to  a  co-operative  store  or  they  prefer  to  do  their 
purchases  in  the  town  on  fair  days.  Furtlier,  their  individ- 
ualist temperament  does  not  tend  to  association.  True,  in 
France   the  "syndicats   agricoles"   and    abroad   the   rural 


CAUSES  OF  SUCCESS  OR  FAILURE  205 

banks,  have  succeeded  brilliantly;  but  this  is  because  these 
forms  of  association  allow  more  independence  to  tlicir  mem- 
bers ;  they  secure  advantages  for  them  without  demanding 
from  them,  we  may  say,  any  sacrifice.  On  the  other  hand, 
agriculturists  have  very  little  sympathy  with  consumers' 
co-operative  societies,  because  they  think  more  of  the  in- 
terests of  the  producer  than  those  of  the  consumer.  They 
are  protectionists;  they  want  high  prices;  they  supply 
the  middle  class  and  the  petty  traders.  And  this  is  why 
we  see  the  ^^syndicats  agricoles"  in  France,  while  claiming 
the  right  to  sell  to  their  members  all  their  agricultural  re- 
quirements, disapproving  of  those  among  them  who  sell  goods 
and  merchandise  for  their  members'  personal  use,  thereby 
becoming  consumers'  societies ;  they  do  not  wish  to  enter 
into  competition  with  the  loc^l  traders. f  A  proof  that  this 
antagonism  is  real  is  that  every  attempt  made  during  the 
last  thirty  years  to  effect  an  agreement  between  the  con- 
sumers' co-operative  societies  and  the  agricultural  societies 
has  failed,  though  it  would  seem  quite  natural  that  the 
former  should  obtain  from  the  latter  all  the  food  commodi- 
ties they  require. 

As  industrial  districts  are  more  favourable  for  the 
development  of  consumers'  co-operation  than  for  agricul- 
tural co-operation,  it  follows  that  consumers'  societies  thrive 
better  in  towns  than  in  the  country.  They  are  products  of 
urban  life.* 

However,  there  is  one  notable  exception  to  this  rule. 
Consumers'    societies    are    not    really    successful    in    very 

t  Author's  Note.  It  must  be  admitted,  however,  that  in  Denmark 
consumers'  co-operative  societies  are  very  numerous  in  country  districts. 

•  Author's  Note,  This  question  arose  recently,  owing  to  a  judg- 
ment of  the  Court  of  Appeal,  which  prohibited  the  "ayndwata  agricolea" 
from  selling  goods  to  their  members.  This  decision  caused  much 
perturbation  in  the  syndical  world.  But  the  majority  of  syndicats 
adopted  the  distinction  which  we  have  indicated,  namely,  the  right 
of  the  iyndicait  to  sell  all  requirements  for  agricultural  production, 
but  not   for  personal  consumption. 


206     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

large  cities,  that  is  to  say,  in  capital  towns.  We  might 
assert  that  up  to  the  present  London  is  a  desert  as  far  as 
co-operation  is  concerned  ®  and  in  Paris  it  is  only  in  the 
suburbs  that  co-operative  stores  are  to  be  found,  and  many 
of  these  are  still  only  badly  managed. 

As  far  as  country  districts  are  concerned,  the  explana- 
tion is  simple;  in  a  sparsely  populated  neighbourhood  the 
people  cannot  group  themselves  round  a  common  shop, 
every  village  has  its  small  hucksters,  or  is  satisfied  with 
travelling  salesmen.^ 

But  as  for  the  capital  towns,  the  explanation  is  not  clear. 
It  may  be,  inversely,  that  the  most  powerful  commercial 
oganizations  are  found  in  them ;  it  is  very  difficult  for 
co-operative  stores  to  fight  against  the  competition  of  large 
strongly  organized  businesses,  whether  it  be  for  grocery,  for 
fancy  goods,  or  for  furniture.  It  may,  perhaps,  also  be  that 
the  inhabitants  of  a  capital  city  often  move  from  house  to 
house,  which  renders  it  difficult  to  form  the  nucleus  of 
crystallization  which  is  indispensable  to  the  prosperity  of  a 
co-operative  society.^ 

6  But  this  is  no  longer  the  case;  in  1922  the  three  London  societies 
have   300,000    members. 

7  The  farmers  have  developed  a  good  consumers  movement  in  the 
United  States  and  fully  hold  their  own  with  the  workers  of  the  small 
towns.  They  are  aided,  of  course,  by  the  absence  of  much  of  the  chain- 
store  competition  which  the  town  worker  has  to  contend  with.  And 
again,  they  have  in  many  states  a  good  buying  agency  in  the  farmers' 
central  exchange.  But  in  this  country  also,  the  farmers  have  developed 
their  marketing  organizations  far  beyond  their  purchasing  societies. 
In  the  majority  of  cases  the  latter  spring  out  of  the  former  as  the 
farmers  realize  it  is  just  as  important  to  control  the  spending  of  their 
money  as  it  is  to  get  that  money  in  the  first  place. 

8  New  York,  Chicago,  and  other  large  cities  suffer  from  a  dearth 
of  co-operative  societies.  Much  of  this  can  be  laid  to  the  nature  of 
the  life  which  the  city  resident  leads;  the  multiplicity  of  his  daily 
contacts  and  the  superficiality  of  his  interests  tear  down  within  him 
those  qualities  that  go  to  the  making  of  a  good  co-operator.  He 
develops   the   mental   and   spiritual   life   of   the   gambler. 


CHAPTER     XIV 

THE     KELATIONS     BETWEEN     CO-OPEEATIVE 
SOCIETIES     AND     THE     STATE 

l^Author's  Note. — This  chapter,  which  does  not  ap- 
pear under  this  title  in  the  French  text,  takes  the  place  of 
Chapters  XIII  and  XIV  in  tJie  French  edition,  which  are 
entitled,  '*The  Legal  Aspect  of  Consumers*  Societies"  and 
"Taxation,"  respectively.  These  chapters  are  of  little 
interest  to  American  readers.  We  have  retained  those 
parts  which  are  of  general  interest,  and  added  a  short  sum- 
mary/ of  the  new  relations  which  have  been  establisJied  be- 
tween the  State  and  the  co-operative  societies  as  a  result  of 
the  war'\. 


The  relations  which  can  be  established  between  co-opera- 
tive societies  and  the  State  are  manifold,  and,  at  least  as  far 
as  concerns  France,  tend  to  multiply.  They  may  be  grouped 
under  the  four  following  sections : — 

(1)  Relations  with  the  State  in  its  capacity  of  legislator: 
The  laws  about  co-operation  can  be  more  or  less  favour- 
able. 

(2)  Relations  with  the  State  as  administrator:  The 
Government  can  delegate  the  administration  of  certain 
public  services  to  co-operative  societies. 

(3)  Relations  with  the  State  as  regards  taxation:  The 
taxes  which  apply  to  co-operative  societies  can  be  more 
or  less  remitted. 

(4)  Relations  with  the  State  as  a  lender  of  capital: 
The  State  may  advance  money  to  co-operative  societies  to 
help  in  their  establishment. 

207 


208     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

1.     Legislation 

The  legal  conditions  necessary  for  the  formation  and 
good  administration  of  a  consumers'  co-operative  society 
are  as  follows: — ^ 

1.  A  minimum  of  formalities  and  expenses  in  consti- 
tuting the  society. 

2.  A  minimum  of  liability  on  the  part  of  the  members 
for  the  engagements  entered  into  by  the  society.  This 
is  the  more  necessary  in  that,  since  the  liability  would 
generally  fall  on  workmen,  who  usually  have  no  property, 
it  would,  in  fact,  be  illusory. 

3.  The  division  of  the  capital  into  very  small  shares, 
so  that  it  can  be  subscribed  by  workers  who  have  only 
small  savings. 

4.  The  possibility  of  increasing  the  capital  indefinitely 
in  accordance  with  the  possible  extension  of  the  society 
and  the  increase  in  membership. 

5.  Civil  personality  allowing  the  society  to  act  in  its 
own  name  without  having  to  bring  in  all  its  members. 
The  different  forms  of  contract  of  association  which  the 

law  allows  consumers'  societies  are  far  from  satisfying  all 
these  desired  conditions  equally  well. 

The  form  usually  adopted  is  a  society  of  shareholders. 
This  offers  many  advantages : — 

(o)   The  capital  is  divided  into  shares  which  are  within 

the  reach  of  all  purses.     The  value  of  the  share,  wliich  for 

1  The  United  States  is  a  federation  of  states,  each  having  its  own 
laws  relative  to  business  privileges  and  practices.  Many  of  these 
states  have  enacted  legislation  favourable  to  the  formation  of  co-opera- 
tive corporations;  other  have  given  no  attention  whatever  to  co-opera- 
tion (unless  it  be  to  co-operative  marketing  among  the  farmers). 
Where  there  is  no  legislation  providing  for  the  formation  of  co- 
operatives, these  must  be  formed  under  the  business  corporation  law, 
and  such  co-operative  features  as  are  desired  must  be  written  into 
the  by-laws  of  the  society  (provided  these  do  not  openly  conflict  with 
the  laws  under  which  the  society  is  incorporated).  A  good  federal 
law  or  uniformity  of  state  laws  is  much  needed. 


CO-OPERATIVE  SOCIETIES  AND  STATE     209 

ordinary  companies  is  generally  £20,  can  be  reduced 
to  £1  for  co-operative  societies.  Further,  it  is  not  neces- 
sary to  pay  the  whole  value  of  the  share  on  subscribing 
(to  "free"  the  share  as  it  is  called) :  it  is  enough  to  pay 
one-tenth  or  the  very  small  sum  of  2s. 

It  would  be  difficult  to  devise  easier  conditions  for  the 
formation  of  capital. 

(b)  The  liability  of  each  member  is  limited  to  the 
amount  of  shares  subscribed  for.  It  is  thus  reduced  to 
the  minimum,  though  the  member  is  liable  for  the  whole 
share  subscribed  for,  and  not  only  for  the  part  paid  up. 
In  fact,  if  a  society  failed  it  would  be  very  difficult  to  make 
workmen  pay  up  the  unpaid  part.  This  is  the  reason 
why  every  society  of  this  nature  in  England  has  to  have 
following  its  name  a  word  intended  to  warn  the  public  of 
the  non-liability  of  members,  namely,  the  word  "Limited." 

(c)  A  co-operative  society  should  always  keep  its  doors 
open  to  those  who  wish  to  become  members  or  those  who 
wish  to  leave.  To  this  end  it  is  necessary  that  the  number 
of  its  shares  (and  in  consequence  the  amount  of  its  capital) 
can  increase  or  diminish  at  any  time.  This  is  essentially 
different  from  an  ordinary  company  where  the  capital  and 
number  of  shares  are  fixed  by  its  articles  of  association, 
and  in  consequence  no  one  can  become  a  shareholder  until 
he  finds  an  existing  shareholder  who  consents  to  sell  him 
his  shares.  Co-operative  societies  are  known  in  French 
legal  phraseology  as  societies  "with  variable  membership 
and  capital."  The  French  word  "societe"  is  used  both 
for  companies  and  societies  in  the  English  sense  of  the 
word. 

(d)  The  society  has  legal  personality,  wliich  means  that 
it  has  an  existence  in  law  as  distinct  from  its  members. 
In  England  this  legal  personality  was  at  first  refused  to 
co-operative  societies,  and  the  law  allowed  tlie  treasurer 
to  steal  their  cash  without  leaving  them  any  remedy.     The 


210     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Act  of  1852,  which  gave  them  a  legal  existence,  was  an 
event  of  capital  importance  in  their  development.  Its 
passing  was  due  to  the  generous  campaign  of  the  Christian 
Socialists,  and  also  of  John  Stuart  Mill  {see  above,  page 
36). 

An  important  result  of  these  conditions  from  the  economic 
and  social  point  of  view  is  that  the  value  of  the  share  can 
never  rise,  however  prosperous  the  society  may  be.  {See 
above,  page  101).  How  can  it  rise,  since  the  shares  register 
is  always  open  to  whoever  may  ask  for  shares .''  The  supply 
is  always  equal  to  the  demand.  There  is  besides  another 
reason  why  the  share  can  never  rise  in  value,  whatever 
profits  the  society  may  make,  and  that  is,  it  carries  no 
profit,  but  only  a  fixed  interest.  This  is  a  characteristic 
difference  from  ordinary  companies,  whose  shares,  being 
limited  in  number,  can  rise  indefinitely,  and  may  be  worth 
a  fortune  to  the  lucky  original  holders, 

A  question  with  which  co-operators  are  concerned  is  that 
of  the  eventual  dissolution  of  the  society,  and  what  is  to  be 
done  with  the  common  funds  in  such  a  case.  According  to 
Common  Law,  if  the  society  is  in  the  form  of  a  commercial 
or  civil  company  the  common  funds  should  be  divided 
among  the  members.  This  rule  is  repugnant  to  ardent  co- 
operators,  because  they  see  in  such  division,  and  in  the 
enriching  of  the  individual  which  may  come  from  it,  a  sort 
of  bankruptcy  of  the  co-operative  idea,  and  they  fear,  not 
without  reason,  that  the  members,  in  their  eagerness  to 
gain  this  windfall,  would  themselves  hasten  the  division  by 
voting  for  the  dissolution  of  the  society.  In  order  to  stop 
such  suicide  it  is  often  laid  down  in  the  rules:  (1)  That 
the  society  shall  exist  in  perpetuity,  and  that  its  dissolution 
can  never  be  declared.  (2)  That  in  the  case  of  the  extinc- 
tion or  dissolution  of  the  society  its  assets  shall  be  given  over 
to  another  co-operative  society,  to  a  federation,  or  even  to 
the  commune,  that  is  the  local  government  body. 


CO-OPERATIVE  SOCIETIES  AND  STATE     211 

As  far  as  the  first  is  concerned  the  law  does  not  allow 
the  members  to  prevent  their  successors  from  doing  what 
they  have  done  themselves,  and  if  the  members  in  the 
future  arc  unanimous  at  any  time  in  deciding  on  disso- 
lution they  will  always  have  the  right  to  dissolve. 
Further,  if  a  member  can  discover  and  apply  some  reason 
for  dissolution  which  has  been  laid  down  in  law  dissolution 
can  always  be  ordered  by  the  courts,  any  clause  to  the  con- 
trary notwithstanding.  French  law,  in  fact,  does  not  allow 
that  any  person  can  bind  himself  by  contract  in  perpetuity 
any  more  than  it  allows  perpetual  vows. 

As  regards  the  second  clause,  it  is  valid  in  so  far  as  it 
applies  to  acquired  money  and  reserve,  but  it  is  not  valid 
for  capital  that  has  been  subscribed  by  shareholders,  which 
cannot  be  taken  from  them. 

Those  who  do  not  know  much  of  legal  matters  ask :  Why 
NO  many  difficulties?  Why  are  men  not  left  free  to  associate 
as  they  like  and  to  draw  up  their  rules  as  seems  to  them 
good? 

The  answer  is  that  this  freedom  could  be  a  great  source 
of  danger  for  strangers,  and  for  the  members  themselves; 
for  strangers,  because  they  might  become  the  victims  of  a 
society  which  only  offered  them  an  illusory  security;  for 
the  members,  because  they  might  be  robbed  by  an  unscrupu- 
lous minority  of  themselves;  and  finally,  it  would  be  enough 
for  companies  to  take  the  often  untruthful  title  of  "co-opera- 
tive" to  have  the  right  to  evade  all  laws.  These  dangers 
are  so  far  from  being  unreal  that  in  spite  of  the  laws  which 
are  found  troublesome  they  are  realized  in  the  most  scanda- 
lous way  every  day.^ 

2  Because  of  the  great  number  of  promotion  schemes  which  bear 
the  name  "co-operative,"  many  states  have  begun  lately  to  define  the 
limits  within  which  that  word  may  be  used  by  a  corporation.  Even 
these  laws  however,  are  for  the  most  part  insufficient,  and  Tlie  Co- 
operative League  has  now  drafted  a  Model  Co-operative  Law  wliich 
is  being  presented  to  the  various  state  legislatures. 


212     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

But  one  can  at  least  improve  the  existing  laws  by  making 
them  more  liberal.  The  distrust  which  the  French  State 
has  always  nourished  towards  all  forms  of  associations  still 
weighs  on  us. 

Up  to  last  June  there  was  no  special  legislation  in  France 
for  co-operative  societies;  they  were  subject  to  the  same  laws 
as  ordinary  companies.  Only  in  1917  was  there  a  special 
law  published,  but  even  this  only  affected  those  co-operative 
societies  which  wished  to  benefit  by  the  State  subsidy  with 
which  we  shall  deal  later.  The  principal  provision  of  this 
law  of  May  13th,  1917,  was  that  only  those  societies  should 
be  recognized  as  co-operative  which  distributed  their  profits 
to  the  consumers,  and  not  to  the  shareholders. 

We  shall  also  mention  the  creation  in  France,  in  1917, 
during  the  course  of  the  war,  of  a  High  Co-operative  Council, 
which  is  an  ofl'icial  body,  inasmuch  as  its  meetings  are  held 
at  the  Ministry  of  Labour  and  its  object  is  to  prepare 
and  discuss  the  legislative  schemes  which  are  of  interest  to 
co-operative  societies.  This  Council  is  divided  into  two  sec- 
tions, one  for  the  producers'  and  the  other  for  consumers' 
societies.  Two-thirds  of  its  members  are  elected  by  the 
societies,  and  one-third  are  nominated  by  the  Government. 

2      Public  Services 

During  the  course  of  the  war,  for  the  first  time  in  France, 
the  State  delegated  to  co-operative  societies  the  manage- 
ment of  certain  public  services,  that  is  to  say,  the  socie- 
ties were  to  administer  them  on  behalf  of  the  State  or  munici- 
palities in  the  interest  of  every  one,  and  not  only  of  their 
members.^ 

3  Nothing  similar  has  been  done  in  America.  During  the  war,  how- 
ever, there  were  many  co-operative  ventures  among  the  civil  servants 
in  Washington  and  elsewhere.  Almost  all  of  these  societies  failed 
early;  and  the  stores  operated  by  the  Post  Office  employes  in  New 
York  City  for  several  years  were  closed  late  in  1921  by  order  of  the 
Government.  There  seems  to  be  no  place  for  co-operation  under  the 
support  or  protection  of  the  Government  in  the  United  States. 


CO-OPERATIVE  SOCIETIES  AND  STATE     213 

This  change  of  tactics  began  in  1916,  when  the  Govern- 
ment handed  over  to  the  Parisian  co-operative  societies  the 
sale  of  frozen  meat,  the  Government  having  the  sole  right 
to  import  this  commodity.  In  the  following  year  the  Govern- 
ment delegated  to  the  societies  the  sale  of  various  goods — 
of  which  the  right  of  importation  was  reserved  to  the  State 
— and  later  they  gave  them  the  management  and  control  of 
numerous  co-operative  restaurants  for  the  working  class  {see 
pages  131,  132).^ 

In  addition  to  this,  on  all  the  new  consulting  committees 
which  have  been  created  for  the  consideration  of  food  supply, 
the  high  cost  of  living,  the  struggle  against  alcoholism,  &c., 
the  Government  has  reserved  a  certain  number  of  places  for 
co-operative  delegates,  so  that  we  may  claim  that  the  latter 
now  rank  among  the  official  institutions  of  the  State. 

3      Taxation 

Until  lately  the  consumers'  societies  in  France  were 
exempt  from  the  tax  known  as  the  "patente"  or  licence. 
The  Council  of  State  consistently  took  up  the  attitude  that 
consumers'  co-operative  societies  did  not  trade  in  the  strict 
sense  of  the  word.  Co-operators  do  not  buy  for  re-sale  as 
do  traders ;  they  buy  to  divide  among  themselves  the  goods 
they  need  for  consumption.  This  is  so  true  that  the 
employes  in  a  co-operative  store  are  generally  called  "dis- 
tributors" (repartiteurs)  not  salesmen  (vendeurs). 

It  is  hard  to  believe  what  strong  passions  have  been 
aroused  by  the  question  of  the  licence — on  the  one  hand,  by 
the  co-operators  who  claimed  exemption,  and,  on  the  other, 
by  their  competitors,  the  traders,  who  claimed  that  the  law 
should  be  applied  equally  to  all.  This  is  the  rock  on  which 
the  project  of  a  regular  co-operative  law  split  five  or  six 

■*  The  Staff  of  the  Co-operative  Reference  Library,  Dublin,  is  author- 
ity for  the  statement  that  similar  action  was  taken  by  the  German 
and  Austrian  governments. 


214     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

times  and  was  at  last  completely  wrecked,  as  the  majority 
in  the  Senate  were  traders,  that  is  to  say,  in  favour  of  the 
imposition  of  the  licence. 

The  question  is  now  solved.  The  Budget  of  April  19th, 
1905,  brought  all  co-operative  societies  within  the  licence 
law,  even  those  which  sold  to  members  only,  on  the  same 
conditions  as  ordinary  traders.  The  one  exception  is  socie- 
ties which  have  no  shops  (at  least,  shops  for  retail  selling, 
but  only  depots  for  depositing  their  goods),  and  which  con- 
fine themselves  to  bulking  the  orders  of  their  members. 
There  are  hardly  any  societies  in  a  position  to  benefit  by  this 
exception.  This  exception  was  made  in  favour  of  agricul- 
tural societies.  The  agricultural  societies  are  co-operative 
purchasing  societies,  but  they  purchase  for  production,  and 
not  for  consumption,  and  a  large  number  of  them  are  only 
depots  which  confine  themselves  to  bulking  their  members' 
orders.  They  thus  come  under  the  exemption  laid  down  in 
law. 

Thus  have  the  traders  triumphed.  But  have  the  co-opera- 
tive societies  suff^ered  much  by  this  law?  We  do  not  think 
so.  What  they  feared  most  in  the  application  to  them  of 
the  licence  was  not  the  pecuniary  charge  easily  com- 
pensated for  by  the  profits  realized  from  sale  to  the  public, 
liberty  for  which  is  implied  in  the  licence,  but  the  moral 
eff'ect.  Co-operators  thought,  as  did  their  opponents, 
that  the  application  of  the  licence  would  cause  the  co-opera- 
tive societies  to  become  like  ordinary  traders,  and  so  become 
liable  to  a  number  of  burdensome  legal  consequences,  such 
as  being  subject  to  the  commercial  courts,  which  are  com- 
posed of  traders,  that  is  to  say,  their  opponents.  It  also 
involves  the  civil  and  even  penal  responsibility  of  the  officials 
of  the  society  in  case  of  infringement  of  the  laws  against 
selling  adulterated  goods.  A  more  serious  consequence  is 
the  incompatibility  of  the  functions  of  managing  a  licensed 
society   with   the   holding   of    any   public   offices,    and   even 


CO-OPERATIVE  SOCIETIES  AND  STATE     215 

certain  liberal  professions,  such  as  that  of  barrister-at-law, 
which  will  have  the  effect  of  depriving  co-operative  societies 
of  the  help  of  many  persons  who  could  render  the  most  valu- 
able service. 

We,  however,  were  always  among  that  small  group 
who  thought  these  fears  ill-grounded,  or  at  least  greatly 
exaggerated,  and  who  held,  on  the  contrary,  that  co-opera- 
tive societies  would  gain  by  paying  the  licence  fees.  They 
gain  freedom  of  action — which  is  never  bought  at  too  high  a 
price  —freedom  to  sell  to  the  public  (though  it  is  not  neces- 
sary to  use  this  power  the  greater  number  of  societies 
have  hastened  to  use  it,  since,  having  to  pay  the  cost,  they 
wish  also  to  make  the  profit) ;  and  liberty  to  use  their 
profits  as  they  wish.  It  is  worthy  of  notice  that,  according 
to  the  law  we  have  just  been  writing  about,  the  payment  of 
the  licence  duty  not  only  confers  the  right  of  selling  to  the 
public,  but  also  the  power  of  using  the  profits  for  other 
purposes  than  the  repayment  of  a  bonus  to  the  individual 
members,  e.  g.,  propaganda,  insurance,  &c. 

Even  though  the  payment  may  induce  many  societies  to 
sell  to  the  public  it  does  not  necessarily  follow  that  the 
co-operative  ideal  is  debased,  or  that  a  trading  spirit  is 
introduced.  The  example  of  the  English  societies  reassures 
us  in  this  respect.  It  is  well  worth  remarking  that  the 
socialist  societies,  which  have  undoubtedly  a  real  feeling  of 
solidarity  and  fighting  fervour,  have  shown  themselves 
strongly  in  favour  of  applying  for  the  licence.  We  must 
remember,  however,  the  rule  referred  to  above  (page  74), 
which  is  that  the  profits  made  from  sales  to  the  public  must 
never  be  divided  among  the  members,  but  must  be  devoted 
to  some  work  of  general  utility. 

But  now  that  we  have  the  general  tax  on  revenue,  is  the 
old  discussion  raised  by  the  licence  question  to  be  re-opened? 

In  England,  the  question  of  the  tax  on  revenue  called 
the  income  tax  has  been  a  matter  of  controversy  for  a  long 


216  CONSUMERS'  CO-OPERATIVE  SOCIETIES 
time.  According  to  the  law,  joint  stock  companies  have 
to  pay  a  tax  on  their  profits  (Schedule  D),  and  deduct  it 
from  the  dividends  paid  to  their  shareholders.  The  traders 
demand  that  the  co-operative  societies  should  be  subject  to 
the  same  conditions,  and  recently  (June  7th,  1916)  the 
Manchester  City  Council  passed  a  resolution  almost 
unanimously  (except  for  half-a-dozen  councillors,  who  were 
also  co-operators)  calling  the  attention  of  the  Chancellor  of 
the  Exchequer  to  the  injustice  suffered  by  all  who  pay 
income  tax,  owing  to  the  exemption  enjoyed  by  the  co- 
operative societies.  The  question  having  become  more  acute 
since  the  war  has  caused  a  large  increase  in  the  income  tax. 
The  co-operative  societies,  however,  on  their  side,  have  not 
ceased  to  protest  against  the  payment  of  income  tax,  and 
so  far  the  State  has  taken  their  view.  Their  arguments  may 
me  stated  as  follows : — 

Co-operative  societies  cannot  be  subject  to  the  tax,  since 
they  do  not  make  profits.  Although  the  English  word 
^'dividend"  seems  to  confuse  the  issue,  the  societies  do  not 
pay  dividends,  but,  in  the  more  accurate  French  expression, 
return  the  overcharge.*  It  is  the  rule  in  England  that  the 
revenue  authorities  do  not  demand  the  tax  from  the  societies 
with  an  open  share  register,  which  is  exactly  the  case  of  the 
consumers'  societies.  Nevertheless,  English  co-operative 
societies  have  submitted  to  paying  the  special  tax  on  war 
profits.  That  they  consider  is  a  patriotic  act  on  their 
part,  but  it  may  always  be  brought  up  against  them  as  a 
precedent. 

But  when  it  is  admitted  that  the, society  is  not  subject  to 
a  tax  on  its  income,  one  may  ask  whether  its  members,  as 

*  Author's  Note.  This  argument  always  seems  to  lose  its  force  as 
regards  societies  which  sell  to  the  public,  as  is  the  case  with  the  major- 
ity of  English  societies.  Co-operators  maintain  it,  however,  even  in 
this  case,  on  the  ground  that  the  profits  made  by  the  sale  to  the  public 
are  not  distributed  among  the  shareholders.  This,  however,  is  open 
to  argument  (see  above,  page  74). 


CO-OPERATIVE  SOCIETIES  AND  STATE     217 

individuals,  should  not  pay  it  on  their  bonuses  ?  The  answer 
is  again  in  the  negative,  for  the  same  reason  as  the  former, 
namely',  that  the  bonus  is  not  income,  but  a  repayment. 
Lately  there  was  another  reason  why  the  tax  should  not  be 
imposed  on  them.  Income  tax  is  not  payable  except  by 
persons  with  an  income  of  over  a  certain  figure  (before  the 
war  £160,  and  since  the  war  £130).  But  the  majority  of 
the  members  of  co-operative  societies  have  a  smaller  income 
than  this.* 

In  France,  the  question  is  far  more  simple  and  would  be 
even  more  surely  answered  in  the  negative  for  the  following 
two  reasons: — 

(a)  All  societies,  associations,  corporations,  &c.,  are 
formally  exempted  from  the  general  income  tax,  so  that  the 
question  cannot  be  raised  as  regards  the  co-operative  socie- 
ties.    The  tax  is  applied  to  the  individual  only. 

(6)  As  regards  the  members,  it  would  be  possible  to  ask 
whether  or  not  they  are  liable  at  law  to  pay  the  tax  on  their 
bonuses.  Then  the  question  arises,  as  in  England,  as  to 
whether  the  payment  is  income  properly  so-called,  or  sim- 
ply a  repayment,  and  the  question  might  be  argued  for  an 
indefinite  time.  In  fact,  however,  it  has  little  real  interest 
because  the  bonuses  are  almost  negligible  in  France.f 

During  the  war  several  belligerent  countries,  notably 
Germany  and  Italy,  have  limited  the  rate  of  interest  which 
companies  are  allowed  to  pay  to  their  shareholders,  and  the 

•  Author's  Note.  But  this  argument  is  now  ruled  out,  because  since 
the  war  the  exemption  limit  was  reduced  to  £130.  There  can  be  rel- 
atively few  co-operators  in  England  with  an  income  below  this  figure, 
especially  when  we  consider  the  great  rise  in  wages  since  the  war. 

t  Author's  Note.  But  the  question  arises  now  on  the  new  tax  im- 
posed in  1920  of  1  per  cent,  on  the  turnover  (all  commercial  sales, 
not  agricultural  ones).  As  this  is  a  question  of  a  tax  on  sales,  not 
on  revenue,  consumers'  societies,  at  least,  consumers'  stores,  cannot 
evade  it.  As  for  the  wholesale  societies,  the  Government  wished  to 
exempt  them  because  they  do  not  sell  to  individuals.  But  owing  to 
the  protests  of  the  traders,  who  are  already  worliing  against  this 
perfectly  legitimate  exemption,  it  will,  probably,  not  be  admitted. 


218     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

question  therefore  arises,  does  this  apply  to  the  co-operative 
societies?  It  has  generally  been  decided  that  it  does  not, 
on  the  same  ground  that  the  bonuses  distributed  by  co-opera- 
tive societies  are  not  profits. 

These  are  not  the  only  taxes  that  may  hit  co-operative 
societies ;  there  are  many  others — all  the  ordinary  duties,  the 
tax  on  personal  property,  stamp  duty  on  the  shares  issued, 
the  mortmain  tax,  which  falls  on  all  bodies  which  do  not  die 
and  therefore  never  pay  death  duties,  and,  if  the  society 
sells  wine  or  alcoholic  liquors,  the  spirit  license.  The  posi- 
tion of  co-operative  societies  as  regards  taxes  generally  is 
unsettled,  not  only  in  France  and  England,  but  in  all  coun- 
tries. A  curious  example  of  this  is  found  in  Switzerland, 
where  a  recent  enquiry  showed  that  the  taxes  paid  by  co- 
operative societies  vary  in  each  canton  in  the  most  incredible 
way,  from  £7  in  Bale  to  £385  in  the  Grisons ! 

4      State  Subsidies 

We  have  already  said  (page  113)  that  in  France  the  con- 
sumers' societies,  feeling  more  than  ever  the  need  of  sufficient 
capital  as  they  grew  larger,  turned  to  the  government, 
following  thereby  the  example  given  by  co-operative  credit 
and  productive  societies.  And  we  see  that  the  State  did,  in 
fact,  create  a  fund  for  them  of  £80,000  which  was  distrib- 
uted among  them  in  the  form  of  a  loan. 

It  is  to  be  expected  that  this  subvention  will  be  enlarged 
by  degrees  (as  happens  with  all  such  subsidies),  but  it  will 
never  be  of  great  importance  in  comparison  with  the  increase 
of  consumers'  societies,  and  above  all  of  wholesale  societies. 

During  the  war  the  State  has  given  co-operative  societies 
far  more  important  advantages  in  the  form  of  facilities  and 
even  privileges  for  the  importation,  transport,  and  sale  of 
various  products. 


CHAPTEE     XV 

PRODUCTION      BY      CONSUMERS* 
SOCIETIES 

Section  I. — Stages  on  the  Road  to  Production 

It  is  natural  that  as  soon  as  consumers'  societies  have 
reached  a  certain  stage  of  development  they  begin  to  consider 
production.  This  aim  is  shown  in  a  remarkable  degree  by 
the  name  which  one  of  the  largest  consumers'  societies  has 
taken,  "The  Produktion  of  Hamburg." 

They  first  consider  production  solely  with  the  wish  of 
economizing  by  getting  food  cheaper  by  producing  them- 
selves the  articles  which  they  used  to  buy  from  the  manu- 
facturer. The  very  simple  notion  occurs  to  them  that,  after 
they  have  absorbed  tlie  profit  of  the  retail  shopkeeper  and 
then,  through  the  wholesale  society,  that  of  the  wholesaler, 
they  can  go  further  and  absorb  the  manufacturer's  profit  by 
making  their  goods  themselves.  By  this  means,  since  they 
control  the  products  in  all  their  stages,  they  will  reach  the 
final  limit  of  cheapness. 

But  it  is  not  only  for  the  pleasure  of  reducing  their  prices 
that  consumers'  societies  enter  production;  it  is  because 
they  understand  that  only  by  this  means  can  they  transform 
the  economic  organization.  Whether  they  are  inspired  by 
the  collectivists'  program — the  socialization  of  all  the 
means  of  production — whether  they  remain  faithful  to  the 
old  ideas  of  associationist  socialism,  or  whether,  without 
abolishing  the  wage  system,  they  only  propose  to  raise  wages 
by  giving  back  to  the  workers  the  portions  taken  from  them 
by  the  landlords  and  the  captains  of  industry,  in  every  case 

210 


220     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

they  feel  the  need  of  owning  or  at  least  controlling  produc- 
tion.^ It  would  be  to  stop  half-way  and  leave  their  work 
unfinished  and  inefficient,  if  they  confined  themselves  to  dis- 
tributing co-operatively  the  wealth  which  would  continue  to 
be   produced   under   the   competitive   system. 

The  humble  Rochdale  weavers  clearly  foresaw  all  this  and 
pointed  out  the  ultimate  consequences  of  consumers'  co- 
operative association.  Readers  should  remember  their 
articles  of  association,  which  we  have  already  quoted  (page 
35),  and  particularly  the  second  to  last,  viz.:  "that  as 
soon  as  is  practicable  this  society  shall  proceed  to  arrange 
the  powers  of  production  .  .  .  and  to  establish  a  self- 
supporting  home  colony  of  united  interests."  They  mark 
out  for  themselves  two  stages  they  would  have  to  reach  to 
gain  this  end:  "(1)  The  manufacture  of  such  articles  as  the 
society  may  determine  upon;  (2)  To  purchase  or  rent  an 
estate  or  estates  of  land  which  shall  be  cultivated" ;  in  other 
words,  the  conquest  of  industry  and  then  that  of  agriculture. 
It  is  true  that  the  rules  only  contemplated  a  very  modest 
form  of  production  which  would  give  employment  to  mem- 
bers who  were  out  of  work,  but  it  is  only  a  question  of  first 
steps.     We  shall  consider  these  two  points  in  turn. 

(a)  Industrial  Production. — Industrial  production,  that 
is  to  say,  the  erection  of  workshops  and  factories,  is  diffi- 
cult of  achievement  by  an  isolated  co-operative  society,  at 
least  unless  it  has  many  thousands  of  members,  not  only  for 
want  of  the  necessary  capital  {see  page  112),  but  above  all 
for  want  of  sufficient  outlet  for  the  goods. 

If  three  hundred  families  are  enough  to  maintain  a 
bakery  it  is  clear  that  many  more  are  wanted  to  employ  a 

1  All  these  motives  are  prevalent  among  co-operative  enthusiasts  in 
the  United  States.  Probably  the  commonest  motive  is  the  "absorbtion 
of  private  profits  for  the  benefit  of  the  workers,"  a  direct  attack  upon 
small  Capitalism.  The  more  advanced  and  radical  of  co-operators,  of 
course,  are  satisfied  with  nothing  less  than  the  ideal  of  an  economic 
order  directly  under  the  control  of  the  organized  consumers. 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     221 

factory  for  making  boots,  soap,  cloth,  or  cotton.  It  is  only 
such  household  necessities  as  were  formerly,  and  still  are, 
made  at  home  in  country  districts  as  domestic  industries, 
such  as  bread  and  pastry,  pork  butchery,  and  jam-making,* 
which  can  be  attempted  with  success  by  a  society  with  a 
membership  of  only  a  few  hundreds,  or  possibly  a  tliousand.^ 
But  from  the  day  when  consumers'  societies  formed  federa- 
tions for  purchasing,  and  were  able  to  show  a  solid  mass 
of  several  thousand  purchasers,  as  in  England,  they  were 
able  to  enter  on  large  scale  production  without  fear.  The 
establishing  of  a  purchasing  federation  or  wholesale  society 
is  an  almost  indispensable  preliminary  step,  and  we  have  al- 
ready pointed  out,  as  one  of  its  principal  advantages,  that 
it  makes  production  possible.  The  English  Wholesale  So- 
ciety, which  is  a  unique  institution,  and  perhaps  the  most 
remarkable  economic  phenomenon  of  the  nineteenth  century, 
has  already  started  a  number  of  factories,  which  produce 
articles  of  the  most  varied  nature — flour,  butter,  bacon,  bis- 
cuits, sweets,  jams,  preserves,  pickles,  chocolate,  tobacco, 
cigars,  cigarettes,  soaps,  candles,  boots,  woollen  and  cotton 
clothes,  corsets,  bonnets,  hats,  brushes,  and  furniture.  There 
is  a  bacon  factory  in  Denmark,  and  one  for  the  production  of 
grease  from  sheep's  wool  in  Australia,  and  forty  creameries 
in  Ireland.'  The  Scottish  Co-operative  Wholesale  Society 
has  also  important  factories,  which  have  furnished  many 
goods  to  the  Russian  government  during  the  war;  the  two 
together  have  produced  goods  to  the  value  of  £12,600,000. 

•  Author's  Note.  It  is  curious  that  an  essentially  •domestic  and 
very  important  industry,  the  laundry  industry,  has  never  been  under- 
taken by  consumers'  co-operative  societies  in  France. 

2  There  are  no  wholesale  productive  works  under  the  control  of 
organized  consumers  in  the  United  States  except  the  biscuit  works  of 
the  Co-operative  Central  Exchange  of  Superior,  Wisconsin.  Some 
societies  have  bakeries,  creameries  (where  butter  and  cheese  are 
made),  etc.  A  few  co-operatively  hire  a  tailor  to  make  them  suits  of 
clothes.     Large   scale   production,  however,   is  still   in   the   future. 

8  The  C,  W.  S.  creameries  in  Ireland  have  lately  been  given  over  to 
the  control  of  the  Irish  productive  societies. 


222     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Besides  this,  production  by  retail  co-operative  societies, 
which  produce  goods  on  their  own  accounts,  reaches  a  total 
of  £15,550,000,  which  means  that  goods  to  the  value  of 
nearly  £28,000,000  are  already  produced  by  the  federated 
or  isolated  consumers'  societies  of  Great  Britain  (all  these 
figures  refer  to  191 4«).'*  *  Doubtless,  these  figures,  though 
they  appear  large,  do  not  represent  one-third  of  the  total 
goods  consumed  by  British  co-operators,  they  have  still 
a  long  way  to  go  before  they  will  fulfil  the  Rochdale  pro- 
gram of  producing  everything  they  consume  and  becom- 
ing self-supporting.  But  still  step  by  step  they  are  ap- 
proaching to  this  ideal,  for  the  ratio  between  the  total  pro- 
duction and  the  total  consumption  is  rising  regularly  and 
fairly  rapidly.  If  we  take  into  consideration  the  fact  that 
the  total  sales  of  co-operative  societies  (£88  millions  in 
1914)  only  represents  a  bare  £76,000,000  at  wholesale  prices 
(see  above  note,  page  54),  it  may  be  said  that  British  co- 
operators  already  produce  nearly  one  half  of  what  they  con- 
sume. Here  are  the  comparative  figures  for  20  years 
(1895-1914):— 

1895. 


1914. 


4  For  1918,  the  Staff  of  the  Co-operative   Reference  Library   gives 
the   following  figures: — 

The  two  Wholesales  £33  millions 

Distributive  Societies  £23         " 

Productive  Associations  £  3        " 


Production        

. . .       £6,000,000 

Turnover           

. . .     £34,000,000 

Proportion        

18% 

Production        

. . .     £32,200,000 

Turnover           

. . .      £88,000,000 

ProportioTi        

37% 

£49  millions 
*  Author's   Note.     More  than  half  this  figure  represents  the  produc- 
tion of  bread  and  flour  which,  in  France,  is  not  classed  as  production 
properly  so-called,  but  as  consumption. 

The  total  given  does  not  include  articles  produced  by  self-governing 
productive  associations,  whose  turnover  reaches  £1,800,000  (I  should 
say  that  the  figures  vary  greatly  in  different  statistical  tables  because 
the  definitions  which  are  given  of  productive  associations  vary).  If 
the  figures  for  production  by  consumers'  societies  is  added  the  grand 


PRODUCTION  BY  CONSUMERS'  SOCIETIES    223 

Thus  in  a  relatively  short  time  production  has  increased 
more  than  five  fold,  while  the  turnover  has  not  quite  trebled. 
All  the  same,  it  is  worthy  of  remark  that  even  though 
production  equals  the  turnover  that  will  not  mean  that 
co-operation  is  entirely  self-supporting.  Industrial  produc- 
tion is  the  manufacture  of  raw  materials  purchased  else- 
where, the  value  of  which  naturally  appears  in  the  figures 
given  in  the  table.  This  brings  us  to  the  necessity  for  co- 
operative societies  entering  into  the  production  of  raw  mate- 
rial. 

(6)  Agricultural  Production. — Industrial  production  has 
for  its  sole  object  the  production  of  manufactured  goods 
— clothes,  furniture,  hardware — or  the  preparation  of  food 
products,  but  these  are  only  a  part  of  the  goods  handled 
by  consumers'  societies.  We  know,  in  fact,  that  the  greater 
number  of  these  societies  are  grocers,  bakers,  or  green-gro- 
cers, which  means  that  they  deal  chiefly  (and  often  exclu- 
sively) in  the  fruits  of  the  earth,  home-grown  or  imported. 

The  sale  of  coal  and  oil,  which  are  also  products  (if 
not  of  the  soil,  at  least  of  the  earth),  also  has  an  important 
place  in  their  sales.  Therefore,  if  they  really  wish  to  be 
self-supporting  they  must  turn  towards  agriculture,  and 
even  mining,  and  that  not  only  on  British  territory,  but 
overseas  also.  The  English  co-operative  societies  already 
sell  16,500,000  bushels  of  wheat,  and  the  wholesale  societies 
sell  1,500,000  tons  of  coal  and  7,500,000  lbs.  of  tea.  These 
figures  would  be  more  than  trebled  if  each  co-operator  did  his 
duty. 

Even  before  the  day  of  the  Pioneers,  the  Congress  of 
1832,  under  Owen's  inspiration,  declared  that  it  must  be 
understood  that  the  final  aim  of  all  co-operative  societies  was 
"community  on  land." 

total  of  British  co-operative  production  rises  to  £30,000,000  for  1914. 
In    1920,   the   figure    for   the   two   wholesales   is   more   than   40   mil- 
lions.     But  this  increase  is  due  chiefly  to  the  rise  in  prices. 


224     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

The  late  war  has  given  a  great  impetus  to  this  move- 
ment, for  the  co-operative  societies,  in  trying  to  fight  against 
high  prices  and  excess  profits,  have  found  themselves  impo- 
tent in  so  far  as  they  do  not  control  the  very  sources  of  pro- 
duction— the  soil  and  raw  materials.  (See  in  the  last  chap- 
ter, the  tendency  of  co-operators  towards  agricultural  social- 
ism. )  It  should  be  stated  that  this  control  is  not  only  neces- 
sary for  the  production  of  foodstuffs,  but  also  to  secure  the 
raw  materials  which  are  necessary  for  industry,  which  also 
come  from  the  soil.  The  English  co-operative  societies  sell 
£1,000,000  worth  of  boots  and  shoes  annually,  but  how 
can  they  reduce  the  price  of  them,  since  they  depend  on 
leather  merchants  and  tanners.'*  And  what  use  would  it  be 
to  them  to  be  curriers  and  tanners,  if  they  could  not  supply 
themselves  with  hides  by  raising  cattle.''  And  how  can  they 
raise  cattle  without  owning  land.-*  Thus  we  always  come 
back  to  the  land. 

From  these  considerations  has  sprung  what  is  known  as 
the  Shillito  League  (from  the  name  of  one  of  the  chairmen 
of  the  English  Wholesale  Society,  who  suggested  it  in  his 
presidential  address  at  the  Co-operative  Congress  at  Don- 
caster  in  1903).  The  Shillito  League,  formed  in  1915,  thus 
defined  its  program.  "It  desires  to  crystallize  the  vague 
mass  of  thought  in  the  movement,  now  in  favour  of  co-opera- 
tive ownership  of  the  sources  of  raw  materials.  It  is  in 
favour  of  the  purchase  of  large  areas  of  land  in  this  coun- 
try, in  Canada,  Argentina,  India,  or  elsewhere,  that  may  be 
found  necessary  and  desirable  for  the  production  of  cattle, 
wheat,  tea,  cereals,  or  other  supplies.  ...  It  recommends 
the  purchase  of  coal  mines  or  coalfields  in  this  country,  as 
and  when   favourable   opportunities   present   themselves."  ^ 

This  ambition  is  not,  however,  confined  to  English  co- 
operators.  In  Switzerland  it  is  also  manifest,  as  is  shown 
by  the  program  approved  by  the  Congress  at  Schaffhausen 

6  The  Shillito  League  has  ceased  to  exist. 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     225 

in  1916,  by  256  votes  to  105,  and  which  is  as  follows: — 
"This  assembly,  considering: — 

(1)  That  it  is  the  duty  of  the  Union  in  the  interests  of 
consumers  to  undertake  production  in  all  its  branches,  agri- 
cultural as  well  as  others ; 

(2)  That  this  cannot  be  accomplished  without  the  acquisi- 
tion and  working  of  agricultural  lands; 

(3)  That  this  acquisition,  if  it  is  possible  at  a  moderate 
price,  does  not  involve  heavy  risks ; 

(4)  That  the  Swiss  Union  is  in  a  position  to  find  the 
money  for  the  purchase  of  one  or  more  agricultural  holdings 
without  tying  up  its  funds  to  the  prejudice  of  its  other 
branches  of  activity; 

Authorizes  the  Committee  to  acquire  one  or  more  agri- 
cultural holdings  on  behalf  of  the  Swiss  Co-operative  Union. 
For  this  purjwse  it  authorizes  the  raising  of  the  necessary 
credit  up  to  a  maximum  of  £14,000." 

The  Shillito  program  has  already  caused  projects  to  be 
formed,  such  as  the  purchase  of  100,000  acres  in  Canada, 
which  will  cost  £160,000,  and  may  bring  in  about  a  million 
and  a  half  bushels  of  wheat;  the  purchase  of  25,000  acres 
of  tea  plantations  in  Ceylon,  which  will  partly  suffice  for  the 
present  trade  in  tea  of  the  Wholesale  Societies ;  and  the  pur- 
chase of  coal  mines,  which  was  the  order  of  the  day  long 
before  the  war. 

The  end  is  still  far  off,  but  the  movement  is  slowly  pro- 
gressing in  that  direction.  There  are  already  more  than 
one  hundred  societies  in  England  which  have  bought  or  rented 
25,500  acres  of  land  for  agricultural  purposes,  and  among 
them,  naturally,  is  the  C.  W.  S.  which  has  seven  estates 
(in  all  32,000  acres,  on  which  it  already  produces  straw- 
berries, gooseberries,  tomatoes,  &c.).  The  farms  are  gener- 
ally run  as  they  were  before  being  purchased  by  these  co- 
operative societies,  as  the  co-operators  did  not  wish  to  dis- 
miss the  farmer.     But  this  is  only  a  provisional  arrange- 


226     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

ment.  It  has  also  eight  tea  plantations  in  Ceylon  and 
India,  with  a  total  area  of  18,000  acres,  which  already  pro- 
duce a  large  part  of  the  tea  consumed  by  the  co-operative  so- 
cieties. To  sum  up,  there  are  already  a  number  of  English 
co-operators  who  enjoy  their  own  tomatoes  and  straw- 
berries, and  drink  their  own  tea.  Purchases  of  land  are 
becoming  more  and  more  frequent.  We  should  also  mention 
the  purchase  by  the  Wholesale  Society,  five  or  six  years  ago, 
of  a  forest  of  palm  trees  in  West  Africa  (Sierra  Leone), 
which  supply  the  raw  material  for  making  soap.  By  this 
means  the  C.  W.  S.  was  able  to  get  behind  the  big  soap 
Trusts. 

It  cannot  be  said  that  these  experiments  have  been  very 
encouraging  so  far.  The  cultivation  of  the  14,500  acres 
held  in  1916  yielded  profits  of  £8,863  and  a  loss  of  £5,865, 
leaving  a  net  balance  of  £2,998  profit,  which,  for  a  capital 
of  £427,000,  only  represents  %  of  1  per  cent.,  or  10s.  6d. 
per  acre.  The  profits  were  higher  in  1917,  £32,000,  and 
£26,000  in  1918 ;  yet  if  we  take  into  consideration  the  great 
increase  in  area  of  the  estates  which  have  nearly  trebled,  the 
results  are  not  much  better.  But  it  is  a  question  of  net 
profit,  which  is  to  say,  that  the  interest  on  the  capital  of 
purchased  estates  and  the  rent  of  leased  estates  appear  on 
the  debit  side  of  the  balance  sheets. 

Nevertheless,  we  must  acknowledge  that,  in  all  experi- 
mental work,  whether  in  the  domain  of  sociology  or  of 
science,  the  average  result  is  a  very  bad  test.  One  single 
success  would  weigh  more  heavily  in  the  balance  than  a  hun- 
dred failures.  It  was  to  be  expected  that  the  consumers' 
societies,  formed  entirely  of  town  workmen  and  clerks,  would 
be  badly  fitted  to  undertake  farming.  Anything  else  would 
have  been  astonishing;  but  all  the  same  some  attempts  at 
agricultural  development  by  consimiers'  societies  have  suc- 
ceeded very  well.  Thus  one  small  society  with  an  estate  of 
200  acres,  made  a  net  profit  of  £120,  and  £226  was  set  aside 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     227 

as  a  sinking  fund.     The  tea  plantations  have  also  produced 
good  results. 

There  is  reason  for  thinking  that  one  of  the  causes  of 
the  ill-success  of  many  of  these  farms  is  that,  like  their  neigh- 
bouring farms,  they  produce  for  sale  instead  of  producing 
solely  for  their  members'  consumption.  It  is  forgotten  that 
if  co-operators  farm  it  should  be  not  to  sell  the  products  but 
to  eat  them.  The  landowner  who  lives  on  his  land  and  its 
products,  even  if  he  does  not  make  much,  does  not  lose,  and 
lives  well.     This  is  what  consumers'  societies  ought  to  do. 

It  has  been  calculated  that  an  estate  of  1,000  acres  should 
suffice  for  the  needs  of  a  society  of  from  2,000  to  3,000 
members. 

(c)  Pvblic  Services. — Public  services,  such  as  the  working 
of  tramway's,  gas  and  electric  lighting,  and  above  all  railway 
and  water  transport,  seem  altogether,  and  for  ever  o\it  of 
the  range  of  a  consumer's  society.  But  why?  Is  it  because 
of  the  large  capital  needed.''  It  does  not  require  more  than 
the  great  co-operative  federations  possess.  Is  it  because  of 
their  nature,  which  is  that  of  service  rendered,  rather  than 
the  supply  of  material  goods.''  Not  so,  for  the  telephone 
service,  which  is  of  the  same  nature,  is  worked  co-operatively 
in  many  towns  in  the  United  States,  as  we  have  already 
said.®  Is  it  because  it  is  the  nature  of  these  services  to  be 
offered  to  all,  to  be  public  in  the  broad  sense  of  the  word, 
and  because  it  would  not  be  morally  or  materially  possible 
to  reserve  them  for  a  group  of  associated  persons?  This 
reason  seems  no  more  conclusive,  since  we  know  that  many, 
if  not  most,  of  the  consumers'  societies  sell  to  the  public. 

The  true  reason  seems  to  us  to  be  that  the  public  service 
does  not  lend  itself  to  the  law  of  gradual  expansion  and  prog- 

« In  instances  where  these  telephone  societies  have  proved  that  there 
is  a  real  desire  or  need  for  telephone  service  and  that  such  service 
amply  pays  for  itself,  the  private  telephone  corporations  are  now 
either  attempting  to  buy  up  this  service  or  they  are  opening  up  other 
Lii3e5   \n   (^position  to   the   co-operatives. 


228     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

ress — like  that  of  all  living  bodies — which  characterizes  all 
forms  of  association.  It  must  be  born  full-grown  and  fully 
armed.  A  tramway  or  city  railway  system  is  only  useful  if 
it  embraces  from  the  beginning  all  the  principal  streets  of 
the  to^vn,  and  we  cannot  imagine  it  beginning  in  one  street 
and  then  extending  its  lines  according  as  members  join  it. 
This  is  why  public  services  can  only  be  created  under  the  form 
of  big  capitalist  or  municipal  enterprises. 

But,  when  considered  carefully,  is  not  this  last  form  co- 
operative.'* Is  not  its  only  object  to  supply  as  cheaply  as 
possible  the  needs  of  consumers  without  seeking  any  gain,  or 
if  there  are  gains,  are  these  not  like  the  bonuses  of  co- 
operative societies,  in  the  sense  that  they  are  used  for 
the  purposes  of  general  utility  or  even  returned  to  the 
consumers,  that  is  to  say  to  the  inhabitants  of  the  town,  in 
the  form  of  a  reduction  of  rates.''  For  it  is  obvious  that  if 
a  municipal  authority  gains  money  in  the  form  of  profits 
from  public  services  it  has  so  much  less  to  collect  from  the 
ratepayers. 

We,  therefore,  are  led  to  regard  municipal  enterprises 
as  a  form  of  co-operative  association  including  all  the  in- 
habitants of  a  town,  as  private  co-operation  developing  into 
public  co-operation.  No  doubt  the  difference  exists,  which 
economists  and  individualists  maintain  with  some  heat,  that 
is,  that  the  so-called  association  is  compulsory,  since  each 
individual  becomes  a  member  by  the  simple  fact  of  his 
residence,  and  his  subscriptions,  if  they  may  be  so-called,  are 
taken  in  the  form  of  taxation. 

We  do  not  seek  to  dispute  this  distinction,  nor  to  con- 
sider it  of  little  importance.  Still,  it  may  be  said  that  there 
are  many  legal  forms  of  contract  recognized  by  jurists  under 
the  significant  name  of  "contracts  (Tadhesion,"  in  which 
free  consent  is  presumed  though  not  expressed;  for  example, 
the  implied  condition  that  a  tenant  taking  a  house  renders 
himself  liable  to  all  the  rates  and  t«^xesj  Qj*  q,  member  on 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     229 

joining  a  club  to  its  rules.  Can  it  not  be  said  that  the  fact 
of  going  to  live  in  a  town  or  remaining  in  it  (since  it  is 
always  possible  to  move  elsewhere),  constitutes  a  sign  of 
adhesion  to  an  "implied  contract"  of  association  with  the 
inhabitants  of  the  town,  and  in  consequence  the  difference 
between  what  is  called  the  co-operative  association  and  what 
is  called  the  municipality  is  one  of  degree  rather  than  of 
kind? 

This  difference  may  well  be  justified  by  the  fact  that  it  is 
here  a  question  of  needs,  such  as  light,  water,  and  means  of 
transport  from  the  home  to  the  place  of  work,  of  so  universal 
a  nature  and  so  necessary  that  they  may  be  said  without 
exaggeration  to  impose  themselves  equally  on  all  citizens. 
It  is  not  possible  to  refuse  them,  and  a  refusal  ought  even 
not  to  be  permitted.  Strictly  speaking,  co-operation  and  na- 
tionalization meet  (as  mathematicians  say  of  parallel  lines) 
at  infinity — whether  it  be  a  consumers'  society  like  the  Bale 
Konsumverein,  embracing  nearly  the  whole  population,  which 
is  a  truly  public  service,  or  whether  it  be  an  undertaking, 
like  the  National  Fire  Insurance  Company,  of  Saxony,  ad- 
ministered by  the  insured  people,  which  makes  it  literally  a 
co-operative  society. 

Thus,  one  is  led  to  distinguish  two  or  even  three  forms 
of  enterprise  corresponding  with  three  degrees  of  needs. 

(a)  Individual  enterprise  for  all  new  needs  or  those  which, 
without  being  new,  are  matter  of  individual  taste,  such  as 
artistic  industries. 

(5)  Co-operative  enterprise  for  all  needs  of  general 
consumption ;  uniform,  homogeneous,  but  still  facultative. 

(c)  Public  municipal  or  State  enterprise  for  all  necessary 
or  universal  needs. 

In  every  case,  even  when  these  distinctions  seem  too 
subtle,  it  is  certain  that  co-operative  societies  will  tend  more 
and  more  to  look  upon  municipal  enterprises  as  their  close 
relations,  and  will  insist  on  co-operatizing  them  and  taking 


230     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

away  from  them  their  administrative  and  bureaucratic  char- 
acter so  that  they  may  be  controlled  by  the  consumers  them- 
selves outside  of  political  influence  (this  will  not  be  displeas- 
ing to  the  liberal  school  of  economists).  Whenever  possible, 
they  will  even  call  on  the  municipality  to  delegate  to  them 
the  running  of  the  enterprises. 

The  same  conflict  which  we  shall  next  discuss  in  other 
branches  of  production  will  renew  itself  here,  for  the  em- 
ployes of  public  services  also  seek  to  form  themselves  into 
co-operative  associations,  of  production,  not  of  consumption, 
and  also  demand  that  the  municipalities,  and  the  State  should 
hand  over  to  them  the  running  of  the  enterprises. 

But  perhaps  it  will  be  possible  to  reconcile  these  hostile 
demands  by  the  same  means  which  we  shall  consider  later, 
and  that  in  the  future  we  shall  see  the  association  of  con- 
sumers controlling  the  industry  for  the  working  of  land,  but 
handing  over  its  actual  carrying  out  to  workers'  associations. 

Section  II. — The  Conflict  between  Consumers'  Co-operation 
and  Producers'  Co-operation 

In  taking  up  production,  consumers'  societies  not  only 
come  into  collision  ^vith  private  firms,  but  also  with  another 
form  of  co-operative  enterprise,  the  industrial  productive 
association,  which  maintains  that  this  part  of  the  work  is  its 
province.  Here  arise  a  conflict  of  rights  which  forms  what 
is  undoubtedly  the  most  important  question  in  our  study  and 
the  most  difficult  to  solve;  for  it  goes  to  the  very  roots  of 
economic  science  in  propounding  this  question:  "To  whom 
does  the  profit  taken  from  the  capitalist  belong .''  To  the 
worker  or  the  consumer.'*" 

This  book  does  not  deal  with  co-operative  associations  for 
production,  but  it  is  well  known  that  under  this  title  is  under- 
stood a  grouping  of  workmen  in  the  same  industry  who 
themselves  produce  certain  goods  or  do  certain  work  and 
divide  among  themselves  the  profits  of  their  labour.     They 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     231 

are  businesses  which  sell  to  the  public,  like  any  form  of 
privately-owned  enterprise,  but  with  this  essential  difference, 
that  the  master  is  eliminated  and  replaced  by  a  little  republic. 
The  types  of  these  republics  are  very  varied.  It  is  also  well 
known  that  this  particular  form  of  co-operative  association 
has  created  great  enthusiasm,  particularly  in  France  and 
during  the  revolution  of  1848,  and  also  in  England  among 
the  "Christian  Socialists,"  and  that  for  a  whole  generation 
it  was  looked  upon  as  the  solution  of  the  social  question. 

Rnally,  though  they  have  not  realized  the  great  results 
expected,  these  associations  have  developed  steadily,  and 
have  achieved  some  startling  successes  in  various  countries, 
particularly  in  France.  The  best  known  of  these  are  the 
Faviilistere  at  Guise,  the  painting  and  decorating  society 
known  as  Maison  LeclairCf  and  the  Joiners'  Association  in 
Paris. 

Such  being  the  circumstances,  it  is  easily  understood  that 
the  productive  associations — ^which  already  had  sufficient 
work  before  them  in  fighting  the  private  firms — would  not  be 
very  pleased  to  see  the  consumers'  societies  poaching  on 
their  preserves.*  This  so  much  the  more  since  they  have 
the  same  aim,  namely,  to  gain  the  control  of  production. 
They  further  use  exactly  the  same  means  as  the  consumers' 
societies,  federating  to  suppress  competition  and  in  order 
to  sell  the  goods  they  produce  to  more  advantage  just  as  the 
others  are  federated  to  produce  better  the  goods  they  sell. 
This  federation  of  co-operative  productive  societies  already 

"Author's  Note.  It  is  amusing  to  see  in  France  how  the  productive 
societies  despise  the  consumers'  societies.  A  few  years  ago  the  official 
paper  at  the  productive  associations,  in  reporting  an  interview  with  M. 
Doumer,  k  propos  of  legislation  for  co-operative  societies,  gave  the 
words  of  M.  Ladousse,  director  of  the  Association  of  Upholsterers,  and 
formerly  President  of  the  Council  Chamber,  as  follows:  "Mr.  Ladousse, 
internipting  M.  Doumer,  expresses  the  opinion  that  consumers'  societies 
have  a  very  limited  social  action,  and  that  they  can  only  be  considered 
ax  a  means  of  ameliorating  the  material  condition  of  the  workman  by 
procuring  goods  for  him,  and  groceries  in  particular,  cheaper  than 
the  ordinary  trader." 


232     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

exists  in  France  under  the  name  of  "Chambre  Consultative" 
(Advisory  Chamber),  and  there  was  even  an  abortive  attempt 
to  create  a  retail  store. 

These  claims  seem  absolutely  incompatible,  and  it  is  not 
easy  to  decide  off-hand  between  the  two  systems,  for  each  of 
the  two  has  strong  arguments  to  bring  against  the  other. 

We  shall  first  take  the  partisans  of  production  by  self- 
governing  associations,  which  is  called  in  England  the  indi- 
vidualist system,  although  it  concerns  associated,  not  indi- 
vidual enterprise.     They  say: — 

(1)  Associations  of  producers  ought  by  their  very  defini- 
tion to  be  more  competent  in  matters  of  production  than 
associations  of  consumers.  To  give  over  production  to  the 
consumers  is  asking  people  who  know  nothing  to  do  every- 
thing; it  is  to  do  away  with  the  laws  of  the  division  of  labour 
and  of  the  specialization  of  function,  and  to  endanger  all 
the  economic  progress  which  has  resulted  from  them.  More- 
over, experience  shows  that  the  consumer  is  passive,  inert, 
and  a  slave  to  routine,  one  who  is  backward  in  following 
technical  progress  and  who  never  takes  the  initiative. 
Everything  new  in  the  industry  and  fashion  has  come  from 
producers. 

(2)  Co-operative  productive  associations  are  the  only 
means  by  which  one  can  hope  to  realize  the  emancipation  of 
the  working  class  from  the  wage  system;  they  can  enable 
the  workers  to  become  their  own  employers  and  to  retain 
the  whole  fruits  of  their  labour.  On  the  other  hand,  the 
consumers'  co-operative  movement  in  taking  production 
into  its  own  hands  will  only  perpetuate  the  wage  system, 
for  workmen  in  the  employ  of  a  consumers'  society  are  not 
in  any  different  circumstances  from  those  working  for  an 
employer  or  a  joint  stock  company.  They  are,  and  will 
always  remain,  wage  earners.  It  is  true  that  they  will  be 
wage-earners  employed  by  other  workers,  but  what  will  they 
gain  by  that  ? 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     233 

Is  it  freedom?  Those  who  have  experience  of  co-opera- 
tive societies  know  that  a  worker  finds  in  his  fellows  an 
employer  worse  than  a  bourgeois  master. 

Is  it  pay?  The  worker  will  get  no  more  than  a  private 
employer — perhaps  a  good  employer — will  give  him.  He 
certainly  will  not  have  the  whole  produce  of  his  work,  since 
from  the  work  done  by  him  a  part  equal  to  the  employer's 
share  will  be  taken  from  him,  the  sole  difference  being  that 
the  part  which  goes  to  the  consumer  will  not  be  called  a 
profit,  but  a  bonus.  Take,  for  example,  a  worker  in  a  boot 
factory  who  produces  goods  of  the  selling  value  of  £120. 
Whether  he  is  working  for  a  private  employer  or  a  co-opera- 
tive society,  in  neither  case  will  he  get  more  than  his  wages, 
say,  £80,  while  in  a  self-governing  productive  association 
he  will  gain  the  profit  also. 

On  the  other  hand,  the  partisans  of  production  by  means 
of  federated  consumers,  i.  e.,  wholesale  societies  (this  is  the 
system  the  English  call  federalist)  have  good  replies  to  these 
two  arguments: — 

(1)  It  is  true  that  the  consumer  is  incompetent  from  the 
technical  point  of  view,  but  he  is  not  asked  to  make  his 
bread  or  his  shoes  himself;  it  is  obvious  that  he  will  have 
them  made  by  persons  skilled  in  the  work.  The  law  of  the 
division  of  labour,  therefore,  is  not  infringed.  The  new 
order  will  simply  have  the  effect  of  giving  the  consumer  the 
control  of  the  production.  Besides,  the  fact  of  having  as  a 
director  a  man  who  is  not  skilled  in  the  particular  business 
does  not  necessarily  mean  inferiority.  This  is  not  a  paradox. 
To  direct  a  business  well,  it  is  necessary  to  know  what  is 
wanted  and  whither  things  are  tending,  but  a  knowledge  of 
the  technical  processes  of  manufacture  is  not  indispensable, 
still  more  it  is  not  necessary  to  be  able  to  do  the  actual  work 
of  production. 

It  must  be  admitted  that  in  the  present  state  of  economics 
the    consumer    shows    himself    little    apt    to    exercise    the 


234     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

economic  lordship  which  is  proposed  for  him.  But  people, 
whether  they  are  consumers  or  not,  will  do  nothing  so  long 
as  they  are  not  called  on  to  do  anything.  It  is  only  now  that 
the  consumer  is  beginning  to  feel  his  rights  and  responsibili- 
ties. The  consumers'  leagues  formed  some  years  ago  in  the 
United  States,  and  recently  introduced  into  France,  are  a 
striking  proof  of  this.  The  entry  of  associated  consumers 
into  the  realm  of  production  will  be  the  best  way  of  educating 
them  both  economically  and  socially. 

(2)  It  is  true  that  the  consumers'  society  when  it  pro- 
duces for  itself  does  not  do  away  with  the  wage  system 
and  in  so  far  does  not  realize  the  dreams  of  the  French 
socialists  of  1848.  But  it  at  least  abolishes  the  capitalist 
employer,  and  in  reality  that  is  all  they  wished  for.  The 
workmen  employed  by  a  consumers'  society  are  not  only  in 
the  service  of  their  comrades,  as  a  critic  of  the  system  said 
a  short  time  ago;  if  they  have  the  co-operative  spirit  they 
can  become  members  of  the  society.  Working  for  a  society 
of  which  one  is  oneself  a  member  is  very  like  working  for 
oneself;  in  any  case  it  is  very  different  from  the  old  wage 
system,  and  it  is  worth  noting  that  it  has  more  resemblance 
to  than  difference  from  co-operative  production,  because  this 
last  nearly  always  finds  it  necessary  to  have  resource  to 
wage-paid  work. 

It  is  said  that  the  workman  who  is  employed  by  a  con- 
sumers' society  gets  only  his  wage  and  not  any  part  of  the 
surplus,  which  goes  into  the  total  profit,  and  is  then  divided 
among  the  consuming  members.  But  it  is  forgotten  that  if 
the  worker  is  himself  a  member  of  the  -society,  and  if  he 
there  spends  the  whole  or  only  three-quarters  of  his  wages  of 

In  support  of  this  theory  he  cites  a  curious  proof  found  in  the  rules 
of  a  co-operative  productive  society  at  Sens — "la  Laborieuse" — an  as- 
sociation of  shoemakers,  who  decided  that  the  manager  should  never 
be  chosen  from  among  the  shoemakers!  As  a  matter  of  fact  he  was 
a  compositor. 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     235 

£80  he  can  get  a  bonus  of  from  £6  to  £8,  and  so  will  find 
himself  in  the  same  position  as  a  worker  in  a  productive  asso- 
ciation, with  the  one  difference  that,  instead  of  getting  his 
profit  in  his  capacity  of  producer  he  gets  it  in  his  capacity 
of  consumer.  But  what  does  it  matter  whether  he  gets  it  with 
one  hand  or  the  other.  Is  it  asserted  that  he  would  receive 
much  more  in  a  productive  society?  It  is  not  certain.  We 
see,  for  example,  that  in  England,  in  1902,  the  92  self-govern- 
ing co-operative  productive  societies  sold  £1,800,000  worth 
of  goods,  on  which  they  made  £102,400  profit.  This 
does  not  give  even  6  per  cent. ;  therefore,  according  to 
the  example  given  above,  the  working  shoemaker  getting 
£80  salary,  and  producing  to  the  value  of  £120,  would  only 
receive  £6  odd  as  profit.  Now,  the  average  rate  of  bonus 
in  English  co-operative  societies  being  13j^  per  cent,  he 
would  be  entitled  to  a  profit  of  £10  odd  in  a  consumers' 
society,  where  he  could  spend  his  £80  of  wages.  In  France, 
the  general  figures  of  the  profits  of  industrial  productive 
societies  are  not  published,  but  it  is  unusual  for  their  divi- 
dends to  reach  10  per  cent,  on  the  wages  paid. 

On  the  other  hand,  the  federalists,  among  whom  are  all  the 
socialists,  say  contemptuously  that  the  self-governing  co- 
operative productive  association  will  always  be  powerless  to 
achieve  a  social  transformation  of  the  magnitude  of  the 
abolition  of  the  wage  system,  as  it  can  only  raise  a  few  small 
groups  of  workers  a  few  degrees.  It  can  remove  them  from 
the  wage-earning  class  of  sfmall  associated  persons,  but  these 
scattered  and  sporadic  enterprises  will  bring  no  better  con- 
ditions to  the  working-class  as  a  whole.  What  is  even 
worse,  it  draws  from  the  working-class  movement  its  most 
intelligent  and  energetic  members.  And  the  history  of  co- 
of>erative  association  for  production  proves  its  power- 
Icssness.  What  has  it  done  in  the  last  sixty  years,  even 
in  France,  the  country  of  its  birth?     It  has  grouped  together 


236     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

20,000  members  who  produce  goods  to  the  value  of  £2,800,000 
(before  the  war).  The  results  are  hardly  better  in  Eng- 
land, and  much  less  in  all  other  countries.  Mr.  Shillito, 
the  president  of  the  Wholesale  Society,  at  the  congress  at 
Doncaster  in  1903,  proudly  contrasted  the  progress  of  pro- 
duction by  the  federated  consumers  with  that  of  production 
by  the  self-governing  productive  federations.  If  we  take 
the  last  two  decennial  periods  we  shall  see  (replacing  the 
figures  [1895-1914]  quoted  by  Mr.  Shillito,  by  the  later 
ones)  that  the  production  of  the  self-governing  workers'  co- 
operative societies  has  only  risen  from  £900,000  to 
£1,800,000,*  which  is  an  increase  of  100  per  cent.,  while 
the  production  of  the  two  wholesales,  the  English  and  the 
Scottish,  has  risen  in  the  same  period  from  £157,000  to 
£12,608,000  which  is  an  increase  of  more  than  700  per  cent. 
(See  Reports  of  General  Co-operative  Survey  Committee, 
1919,  page  278.)^ 

Even  if  it  were  admitted  that  the  productive  co-operative 
societies  could  develop  until  they  had  conquered  all  industry 
what  sort  of  nation  would  be  formed  thereby  and  with  what 
spirit  would  it  be  animated.''  It  would  be  solely  animated  by 
the  individual  trade  interests;  the  general  public  interest 
would  be  sacrificed  to  the  interests  of  the  various  corpora- 

*  Author's  Note.  In  these  statistics  of  self-governing  societies  for 
production  we  do  not  include  co-operative  mills,  as  these  are  merely 
dependent  on  the  distributive  societies  with  the  object  of  supplying  the 
latter  with  flour.  Besides,  in  the  course  of  this  decade,  they  have  de- 
creased in  importance,  owing  to  the  competition  of  the  mills  belonging 
to  the  Wholesale. 

7  The  producers'  co-operatives  in  the  United  States  have  had  even 
more  trouble  than  the  consumers'.  At  the  present  time  there  are  a 
few  of  these  in  existence: — tailor  shops,  cigar  factories,  bakeries,  etc. — 
but  the  number  of  failures  seems  to  keep  pace  wth  the  number  of 
new  associations  that  spring  up  all  over  the  country.  The  organizers 
find  themselves  very  heavily  handicapped  from  the  beginning.  They 
cannot  raise  sufficient  capital,  they  cannot  find  a  dependable  market 
for  their  product,  and  they  cannot  find  workers  willing  to  work  as 
hard  for  themselves  as  they  are  compelled  to  work  for  the  "private 
corporation. 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     237 

tions.  It  would  be  the  reign  of  competition  and  the  struggle 
for  profits  as  today,  with  the  only  difference  that  there 
would  be  no  big  employers.  The  amount  of  progress  would 
be  very  small. 

The  federalist  system  has  the  rare  advantage  of  being  at 
once  supported  by  the  business  men  and  the  socialists; 
the  business  men  support  it  because  of  the  good  results 
obtained,  the  socialists,  because  a  social  system  where  all 
production  is  in  the  hands  of  all  the  consumers  associated 
together,  and  where  production  instead  of  being  a  separate 
enterprise  will  be  organized  in  the  form  of  "social  service," 
comes  at  the  head  of  all  coUectivist  programs.  If  we 
imagine  the  Wholesale  Society  of  Manchester  enormously 
grown  until  it  has  absorbed  all  the  manufacturing  and  agri- 
cultural industry  of  England,  owning  all  the  means  of  pro- 
duction, and  elected  by  all  the  consumers  (that  is  to  say 
every  one)  we  shall  get  a  view  of  what  a  coUectivist  state 
might  be,  or,  as  the  Germans  call  it,  of  a  "Social  Democ- 
racy,'* 

That  is  why  all  the  congresses  of  the  socialist  co-operative 
societies  in  France  demand  organization  of  production  b}'  the 
consumers'  societies.*  In  fact,  since  the  socialists  give  to 
co-operation  no  other  aim  than  the  socialist  aim  of  trans- 
forming capitalist  property  into  collective  property,  it  is 
clear  that  a  good  way  of  coming  together  is  for  the  produc- 
tive co-operative  societies  to  become  the  property  of  all  the 
consumers.  But  this  view  is  far  from  being  pleasing  to  every 
one,  and  it  is  because  of  this  dangerous  resemblance  between 
federalist  co-operation  and  collectivism,  and  through  fear 
of  seeing  co-operation  end  in  a  reign  of  bureaucracy  and 
centralization,  that  many  co-operators  remain  faithful  to  the 

•  Author's  Note.  However  this  claim  of  the  socialist  co-operative 
consumers'  societies  to  absorb  the  productive  societies  has  caused 
quarrels  with  the  latter,  notably  a  disagreement  with  the  wine  sellers' 
associations,  from  whom  the  socialist  co-operative  societies  purchased 
wine. 


238     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

old  system  in  spite  of  its  faults,  that  is  of  production  by  free 
associations  of  producers,  federated  as  far  as  possible. 

Such  is  the  opposition  between  the  two  systems.  But  is 
it  irreconcilable  so  that  one  must  choose  the  one  or  the  other? 
Should  it  not  rather  be  admitted  that  each  has  its  merits  and 
that  each  should  find  its  place  in  a  general  co-operative 
organization?  We  hold  this  view,  that  even  if  it  were 
assumed  that  the  consumers'  societies  embraced  the  whole 
population  of  the  country  and  furnished  it  with  all  the 
articles  needed  for  household  consumption  (which  is  far  from 
being  realized),  and  that  all  they  sold  was  produced  by 
their  members  in  their  own  factories,  many  thousands  of 
workers  would  remain  outside  the  co-operative  consumers' 
ranks  as  producers,  namely,  all  the  workers  employed  in  the 
serviqe  of  the  State,  the  municipalities,  the  railways,  the  mer- 
cantile marine  and  sea  fisheries,  in  manufacture  for  export 
and  even  in  artistic  and  luxury  industries  which  it  is  hardly 
possible,  or  even  desirable,  to  bring  into  the  co-operative 
form.  Besides  this,  there  are  all  the  land  workers  and  min- 
ers, for  it  can  be  seen,  from  what  we  have  already  said,  that 
it  will  be  a  long  time  before  the  co-operative  consumers'  so- 
cieties have  bought  out  the  land  and  its  minerals.  There- 
fore, in  this  great  field  outside  the  consumers'  movement, 
why  should  not  the  productive  co-operative  societies  have 
the  right  to  set  up  an  independent  movement  if  they  can? 

Even  in  those  industries  which  may  be  considered  as  being 
by  right  inside  the  economic  sphere  of  the  consumers'  socie- 
ties, and  destined  one  day  to  be  absorbed  by  them,  why  should 
not  co-operative  production  establish  itself  temporarily  in 
such  a  way  that  when  the  time  is  ripe  it  will  be  absorbed  as 
an  organ  of  the  Wholesale  Society? 

In  England,  the  conflict  of  systems  which  we  have  just 
considered  does  not  prevent  the  most  intimate  relations  being 
formed    between    producers'    and    consumers'    co-operative 


PRODUCTION  BY  CONSUMERS'  SOCIETIES     239 

societies.     In  fact,  the  producers'  societies  look  to  the  con- 
sumers' societies  for : — 

(1)  The  capital  necessary  for  setting  them  up — which 
they  would  have  great  difficulty  in  finding  themselves — while 
the  consumers'  societies  sometimes  do  not  know  what  to  do 
with  their  surplus  capital.  That  is  why  half  the  shares  of 
the  Paisley  Productive  Society,  one-third  of  those  of  the 
Hebden  Bridge  Society,*  and  six-sevenths  of  those  of  the 
Airedale  Society  belong  to  consumers'  societies.  The  same 
is  true  of  the  Scottish  societies,  of  which  it  is  hard  to  say 
whether  they  are  independent  or  simply  branches  of  the  con- 
sumers' societies.  The  German  socialist,  Lassalle,  asked  the 
State  to  provide  100  million  thalers  (£15,000,000)  for 
workers'  associations,  and  believed  that  with  this  sum  he 
would  be  strong  enough  to  realize  social  democracy.  The 
consumers'  co-operative  societies  could  place  about  double 
this  sum  at  the  service  of  the  workers'  productive  associ- 
ations (see  page  116). 

(2)  Customers,  which  are  even  more  indispensable  to 
their  existence  than  capital,  and  not  less  difficult  to  find. 
Thanks  to  the  consumers'  societies,  a  productive  association, 
-— ^or  example,  one  of  working  shoemakers — knows  in 
advance  how  many  boots  it  will  have  to  supply,  and  can  work 
with  a  certainty  of  a  market. 

In  France,  things  cannot  be  worked  in  the  same  way,  for 
the  two  kinds  of  relationships  which  we  have  just  pointed  out 
are  both  almost  impossible.  The  French  consumers'  societies 
have  barely  enough  capital  to  supply  their  own  actual  needs, 
or  else  have  too  often  locked  up  their  capital  in  buildings 
and  shops.  If  they  are  unable  to  supply  the  productive 
societies  with  help  in  the  form  of  capital  they  are  hardly  in 

8  The   Hebden  Bridge  Society,  which  is,   according  to  the   Staff  of 

the  Co-operative   Reference  Library  of  Dublin,  the   oldest   Producers' 

society  in    England,   has  recently  been  absorbed   by  the   Co-operati\« 
Wholesale  Society. 


240     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

a  better  position  to  provide  them  with  customers,  for  the 
obvious  reason  that  most  of  the  French  consumers'  societies 
sell  only  groceries  or  bread.  What  then  can  they  buy  from 
workers'  productive  associations? 

This  is  why  the  understanding  between  consumers'  and 
producers'  societies,  which  has  often  been  approved  at  con- 
gresses, has  remained  until  now  a  pious  hope.  One  may, 
however,  refer  to  a  few  isolated  successful  attempts.  The 
workers'  glass  works  at  Albi,  a  workers'  association  manu- 
facturing paper  bags  in  Paris,  and,  in  Belgium,  the  Weavers' 
Society  at  Ghent,  have  been  formed  by  capital  which  has 
been  supplied  to  them  in  part  by  the  consumers'  societies,  and 
have  more  or  less  succeeded,  thanks  to  the  latter's  pur- 
chases. Certain  consumers'  societies  had  paid  temporarily 
20  per  cent,  above  current  prices  for  bottles  to  keep  the 
workmen's  co-operative  at  Albi  going  when  it  started. 

Further,  even  supposing  the  collaboration  between  con- 
sumers' and  producers'  societies  were  realized,  this  solu- 
tion does  not  solve  all  the  difficulties.  If  a  sleeping  partner- 
ship is  formed  between  any  consumers'  society  and  any 
individual  producers'  society  it  would  mean  the  development 
of  anarchy  in  production,  which  would  perhaps  be  hardly 
better  than  the  existing  competitive  system.  On  the  other 
hand,  if  the  sleeping  partnership  comes  from  a  wholesale 
society,  acting  on  behalf  of  the  local  societies,  the  produc- 
tive societies  would  find  themselves  no  less  at  the  mercy 
of  the  formidable  customer  than  do  the  small  manufacturers 
who  today  work  for  the  "Bon  Marche"  or  the  "Louvre." 

In  short,  this  form  of  relationship  necessarily  implies  con- 
trol. The  consumers'  societies,  in  their  double  capacity  of 
chief  customers  and  chief  shareholders  of  the  producers'  as- 
sociations, would  of  necessity  have  a  deciding  influence  on 
their  actions.  And  though  this  influence  might  be  very 
healthy,  in  that  it  would  maintain  in  the  workers'  associa- 
tions the  administration  they  so  often  lack,  it  must  still  be 


PRODUCTION  BY  CX)NSUMERS'  SOCIETIES     241 

recognized  that  the  control  would  be  such  that  it  would  make 
the  self-government  of  the  producers'  associations  almost 
illusory,  and  would  end  in  a  state  of  affairs  very  like  feder- 
alist co-operation  if,  for  example,  the  consumers'  societies 
were  the  sole  customers  of  the  producers'  association.  It 
is  clear  that  this  is  the  tendency  in  England,  in  spite  of  the 
efforts  of  Vansittart  Neale  and  Holyoake  in  the  last  gener- 
ation and  of  Aneurin  Williams  and  the  co-partnership 
school  today.  While  this  school  wishes  the  consumers'  so- 
cieties to  confine  themselves  to  supporting  the  productive 
associations  until  the  day  when  the  latter  are  able  to  stand 
on  their  own  feet,*  the  consumers'  societies  have,  in  fact, 
reached  a  higher  stage  of  organization  and  federation  than 
the  producers'  societies,  and  more  often  strangle  them  than 
help  them.  Thus  in  England  in  1910,  one  of  the  most 
powerful  co-operative  productive  associations  (that  of  the 
hosiery  workers  of  Leicester)  was  bought  by  the  Wholesale, 
and  consequently  ceased  to  exist  as  a  self-governing  body, 
becoming  merely  a  factory  belonging  to  the  Wholesale.  The 
workmen-members  protested  vigorously,  but  the  distributive 
societies,  who  held  two-thirds  of  the  shares,  and  gave  the 
largest  orders,  voted  for  the  transfer  to  the  Wholesale  and 
the  working-members,  who  possessed  only  one-seventh  of  the 
capital,  were  unable  to  prevent  this  absorption.  It  has  been 
said  that  it  would  have  been  better  if  the  English  and  Scot- 
tish Wholesale  Societies  instead  of  building  so  many  fac- 
tories had  used  the  same  capital  to  finance  producers'  as- 
sociations; but  it  is  doubtful  whether  they  would  have  ob- 
tained the  same  results  by  this  method. 

It  seems,  however,  that  agriculture  ought  to  lend  itself 
well  to  this  form  of  understanding,  for  we  have  already  seen 

•  Author's  Note.  Mr.  Vansittart  Neale  said  at  the  Congress  of 
1889,  that  the  distributive  societies  should  do  for  the  productive  socie- 
ties "that  which  a  mother  does  for  her  child — feed  it,  clothe  it,  and 
teach  it  to  walk,  until  it  is  strong  enough  to  go  by  itself." 


242     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

that  consumers'  societies  have  not  succeeded  very  well  in 
agricultural  work.  For  this  reason  would  they  not  do  better 
to  leave  the  cultivation  of  the  soil  to  workers'  co-operative 
societies — either  by  letting  the  ground  to  workers  who  would 
become  a  farmers'  co-operative  society — or  even  by  helping 
them  to  form  themselves  into  co-partnership  associations? 
There  would  still  be  a  great  difficulty  to  overcome,  because  if 
these  agricultural  co-operative  societies  had  to  send  all  the 
produce  of  their  farms  to  the  consumers'  society  they  would 
be  at  its  mercy,  since  it  could  fix  whatever  price  it  wished 
and  if,  on  the  other  hand,  the  agricultural  co-operative  socie- 
ties had  the  right  to  sell  in  the  open  market,  the  consumers' 
society  would  hardly  have  any  advantage  in  supporting 
them.* 

What  is  to  be  done  to  settle  this  difficult  question?     Let 

*  Author's  Note.  Co-operative  societies  for  production,  which  are 
not  at  all  numerous  in  industry,  can,  on  the  contrary,  be  counted  by 
the  thousand  in  agriculture,  but  they  are  very  diverse  in  their  nature. 
Thus,  there   are: — 

(a)  Agricultural  Credit  Societies,  which  have  no  connection  with 
the   distributive    co-operative    store; 

(6)  Agricultural  Purchase  Societies  (called  gyndicats  agricoles 
in  France),  which  resemble  the  distributive  societies  in  the  sense 
that  they  also  buy  to  distribute  among  their  members;  but  that 
which  they  buy  is  destined  for  agricultural  production,  and  not  for 
personal  consumption.  They  bear  no  relationship  to  our  consumers' 
societies; 

(c)  Agricultural  Societies  for  Production  and  Sale,  which  are 
still  less  common,  except  in  the  matter  of  butter  production.  It 
would  seem  natural  that  the  distributive  societies  would  combine 
with  them  by  buying  the  food  which  they  produce,  butter,  wine, 
vegetables,  &c.  Nevertheless,  repeated  attempts  in  this  direction 
have  failed.  This  may  be  explained  by  the  fact  that  these  co- 
operative societies  are  composed  exclusively  of  country  landowners, 
and  are  thereby  completely  outside  the  industrial  and  co-operative 
movement ; 

(d)  Co-operative  Farming  Societies,  formed  by  agricultural 
labourers,  who  combine  with  the  object  of  working  collectively  some 
land  which  they  buy  or  rent.  These  are  still  in  an  experimental 
stage.  However,  these  collective  farms  {affitenze  collective),  are 
fairly  numerous  in  Italy.  In  England,  there  are  also  some  hun- 
dreds constituted  under  the  recent  legislation  for  the  development 
of  small  holdings   and  allotments. 


PRODUCTION  BY  CONSUMERS'  SOCIETIES  2i3 
producers'  and  consumers'  co-operation  develop  freely,  each 
in  its  sphere,  even  if  the  two  spheres  seem  to  overlap;  by 
inter-penetration  they  will  end  by  forming  a  single  whole. 

It  is  noteworthy  that,  by  following  the  natural  law  of 
their  development,  these  two  forms  of  co-operation  approach 
each  other  so  nearly  that  in  the  end  it  is  hard  to  distinguish 
the  one  from  the  other.  If,  on  the  one  hand,  the  consumers' 
societies  open  workshops  for  the  production  of  their  goods, 
productive  societies  also  can  open  shops  for  the  sale  of  their 
products.  If  the  consumers'  societies  give  their  workers 
a  share  in  the  profits,  producers'  societies  in  England  give 
their  customers  a  share.  Then,  suppose  on  the  one  hand  a 
consumers'  society  which  halves  its  profits  between  its  pur- 
chasing members  and  its  workers — and  on  the  other  hand  a 
(producers'  society,  which  also  divides  its  profits,  half  to  its 
working  members  and  half  to  its  customers  (which  are  per- 
haps themselves  consumers'  societies) — are  they  not  almost 
the  same.''  It  is  on  these  lines  of  convergence  that  both 
producers'  and  consumers'  societies  should  be  guided.  With 
regard  to  the  workmen's  share  in  the  profits  of  consumers' 
societies,  see  the  following  chapter.  As  regards  the  partic- 
ipation of  customers  in  productive  societies  there  are  many 
examples  in  England.  Besides,  the  large  Insurance  Com- 
panies have  led  the  way  in  this  respect.  In  Ghent  the  produc- 
tive society  called  "Z^  Tissage  (weaving)  Cooperatif  assigns 

In  France  there  were  none  of  these  societies  up  to  the  time  of  the 
war,  but  a  certain  number  have  just  been  started  in  the  regions 
invaded  by  the  enemy  and  now  liberated.  In  districts  where  the  land 
has  been  so  ravaged  that  no  buildings  remain,  where  even  the  bound- 
aries of  the  fields  cannot  be  distinguished,  and,  moreover,  where 
capital  and  agricultural  implements  are  very  scarce,  it  is  obvious  that 
collective  cultivation   will  be  the  most  economical. 

Of  these  four  forms  of  co-operative  agricultural  association  it  is  the 
last  which  is  aimed  at  in  our  text,  as  it  is  the  only  one  which  can  solve 
the  problem  of  an  entente  between  the  distributive  co-operative  society 
and  the  productive  society  in  the  domain  of  agriculture,  if  these  pro- 
ductive co-operative  societies  become  purveyors  for,  and  in  some  form 
the  tenants  of,  the  consumers'  societies.  The  practical  difficulty  which 
we  note  above  remains  in  any  case. 


24>4s     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

35  per  cent,   of  its  profits  to  the  working  members,  and 
25  per  cent,  to  its  customers. 

Thus,  these  two  great  co-operative  movements,  although 
they  have  started  from  opposite  poles,  can  unite  on  a  higher 
plane  which,  while  giving  the  consumer  that  control  which  the 
logic  of  his  economic  conditions  assigns  to  him,  will  ensure 
to  the  working  producers  greater  independence  than  they 
now  have,  and  above  all,  the  precious  feeling  that  they  are 
controlling  themselves,  that  they  are  working  for  themselves, 
and  that  they  gather  all  the  fruits  of  their  labour  to  which 
they  are  entitled.  The  realization  of  this  harmony  is  the 
more  probable,  since  there  is  no  doubt  that  it  will  be  the 
same  persons  who  form  both  organizations,  but  in  different 
capacities. 


CHAPTEE     XVI 

THE     EMPLOYES      AND      WORKMEN      IN      CO- 
OPEEATIVE       SOCIETIES 

It  might  be  supposed  that  this  chapter  deals  only  with 
questions  of  internal  order  which  are  merely  of  interest  from 
the  point  of  view  of  the  good  administration  of  societies. 
On  the  contrary,  however,  we  have  here  one  of  the  most  vital 
points  with  regard  to  the  future  of  co-operation,  because 
herein  are  opposed  two  antagonistic  conceptions,  which 
may  be  called  producers'  socialism  and  consumers'  socialism. 
This  antagonism  is  manifested  by  the  conflict,  which  exists 
in  a  more  or  less  latent  condition  between  the  co-operative 
movement  and  the  syndicalist.  In  her  book  "The  Co-opera- 
tive Movement  in  Great  Britain"  Miss  Potter  (Mrs.  Sidney 
Webb)  foresees  the  advent  of  this  regime,  in  the  aspect  of 
two  federations,  one,  that  of  consumers  in  their  co-operative 
societies,  the  other,  that  of  producers  in  their  trade  unions, 
and  the  equilibrium  maintained  by  the  balance  of  these  two 
antagonistic  powers.  We  must  add  that  this  equilibrium 
would  be  much  better  realized  if  every  person  were  a  mem- 
ber of  the  two  organizations,  co-operation  and  trade  union- 
ism, as  this  conflict  would  therefore  not  be  on  the  surface, 
but  in  the  conscience  of  each  individual. 

(1)  Conflicts  Between  Co-operative  Societies  and  their 
Employes 

The  question  of  the  relations  between  the  societies  and 
their  employes  does  not  become  very  acute  as  long  as  the 
societies  limit  themselves  to  retail  trade  and  consequently 
employ  only  shop  assistants,  who  are  somewhat  above  the 

245 


246     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

level  of  the  ordinary  working  class.  But  from  the  time  that 
societies  engage  in  production,  and  have  therefore  to  employ 
manual  labourers  (who  are  generally  trade  unionists),  the 
situation  becomes  critical.  In  England  the  number  of  wage- 
earners  in  1917  was  162,000,  of  whom  101,000  were  em- 
ployed in  shops  and  61,000  were  employed  in  factories.^  If 
we  only  consider  the  shop  emplo^'es,  we  see  that  tlie  figure 
101,000  represents  1  employe  for  37  members,  i.  e.,  for  37 
families  and  for  £1,420  of  annual  sales.  This  proportion 
does  not  seem  excessive,  but  it  might  still  be  reduced  by  the 
fusion  of  societies  {see  page  186). 

The  problem  presented  here  is  similar  to  that  of  the  rela- 
tions between  the  State  and  its  employes,  which  has  already 
caused  very  grave  trouble  in  France  and  elsewhere,  and 
which  will  become  increasingly  menacing  to  the  nation. 

Syndicalism  regards  every  labourer  as  a  person  exploited 
and  every  employer  as  an  exploiter,  and  the  syndicalist  is  not 
disposed  to  make  exceptions  in  the  case  of  people  employed 
by  a  co-operative  society,  or  by  a  co-operative  wholesale 
society.  Syndicalism  does  not  renounce  for  them  either  the 
class  war  or  the  weapon  of  the  strike.  It  wants  wages  to  be 
as  high  as  possible,  even  though  this  rise  in  wages  can  only  be 
procured  by  an  equal  rise  in  prices. 

Co-operation,  on  the  contrary,  regards  the  consumer  as 
the  person  exploited,  and  wishes  to  free  him.  It  recog- 
nizes no  class  war,  because  in  its  very  definition  the  function 
of  the  consumer  is  independent  of  all  class  distinction  or  of 
sex.  It  strives  to  realize  cheapness  by  reducing  the  cost 
of  production  to  a  minimum. 

We  might  suppose  that  the  relations  between  the  co-oper- 
ative societies  and  their  employes  would  be  facilitated  by 
the  fact  that  both  belong  to  the  working  class  and  should 

1  By  the  beginning  of  1921  these  figures  had  risen  to  a  total  of 
201,500,  of  whom  114,500  were  employed  in  distribution  and  87,000  in 
production. 


EMPLOYES  AND  WORKMEN  247 

therefore  look  upon  one  another  as  comrades.  But  such  is  by 
no  means  the  case,  as,  on  the  one  hand,  labourers,  wlien  they 
have  control  of  an  enterprise,  often  display  more  harshness 
than  middle-class  employers,  and,  on  the  other  hand,  man- 
agement committees  of  co-operative  societies,  being  com- 
posed of  workmen  absolutely  ignorant  of  ever^'thing  out  of 
their  own  particular  line,  do  not  inspire  their  employes  with 
the  same  respect  as  a  middle-class  employer,  whose  capa- 
bility is  beyond  question.  This  fact  frequently  results  in 
strained  relations.  Moreover,  those  who  are  not  well  dis- 
posed towards  the  co-operative  movement  do  not  miss  a 
chance  of  stirring  up  the  employes  and  the  workmen  against 
the  societies.  Thus,  the  important  liberal  and  economic 
paper,  Le  Temps,  in  reporting  the  Co-operative  Congress 
at  Rheims  in  1913,  concluded  as  follows:  "Seeing  how  co- 
operative societies — which  are  the  embryo  of  the  new  social 
order — treat  their  employes,  workers  can  appreciate  the 
degree  of  liberty  which  would  be  theirs,  when  these  societies 
are  firmly  established." 

These  two  tendencies  are  antagonistic  in  their  aim,  and 
it  is  almost  inevitable  that  this  opposition  should  show  itself 
in  practice. 

Trade  unions  demand  of  co-operative  societies : — 

( 1 )  The  maximum  wage  for  their  workmen,  that  is  to  say 
the  trade  union  wage. 

(2)  The  minimum  working-day. 

(3)  The  exclusion  of  workmen  other  than  trade  unionists. 
They  complain  that  these  conditions  are  accepted  by  only 

a  relatively  small  number  of  societies. 

However,  co-operative  societies  as  a  general  rule  try  to 
satisfy  these  claims — the  first  and  second,  at  any  rate.  All 
those  of  socialistic  tendency,  and  the  majority,  even  when 
neutral,  make  a  rule  of  ensuring  to  their  workmen  and  em- 
ployes the  most  favourable  rate  of  pay  suitable  to  the  eco- 
nomic conditions  in  which  they  are  obliged  to  live.     And 


248     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

they  almost  always  give  a  higher  wage  and  fewer  hours  of 
work  than  their  commercial  competitors.^  Doubtless,  there 
are  some  co-operative  societies  which  are  no  better  in  this 
respect  than  private  employers,  but  unjust  generalizations 
are  made,  for  example,  that  in  a  Congress  of  the  Social 
League  of  Buyers  (Ligue  Sociale  des  Acheteurs)  by  M. 
Brunhes :  "Co-operative  societies  do  not  trouble  them- 
selves with  the  conditions  of  work  and  workers'  wages." 

Co-operative  societies,  however,  cannot  undertake  to  pay 
the  trade  union  wage,  or  keep  their  shops  open  only  eight 
hours  a  day,  where  such  conditions  would  not  permit  them 
to  compete  with  the  ordinary  traders  and  would  oblige  them 
to  shut  their  shops.  It  would  be  acting  contrary  to  the 
interests  of  the  working-class  to  ruin  co-operative  societies 
by  trying  to  obey  the  mandate  of  the  trade  union.  Indeed, 
even  in  the  cases  where  they  are  unable  to  pay  the  trade  union 
wage,  co-operators  try  at  least  to  ensure  the  minimum 
wage.  And  they  generally  allow  the  same  pay  to  women  as 
to  men  for  equal  work.  In  England,  the  question  of  a  mini- 
mum wage  has  often  been  discussed  at  Congress,  24s.  a  week 
being  proposed  as  reasonable,  and  this  was  a  minimum  fre- 
quently applied  in  practice  before  the  war. 

But  if  co-operative  societies  generally  pay  their  lesser  em- 
ployes and  their  women  employes  higher  than  the  current 
rate,  they  pay  their  higher  officials  very  much  less.  Cernes- 
son  has  remarked,  with  reason,  that  this  is  a  grave  danger 
to  the  societies,  because  their  higher  employes  are  tempted 
to  leave  them  and  go  to  their  competitors.  But  we  can 
understand  that  workmen  who  are  members  of  co-operative 

2  This  is  also  true  of  the  vast  majority  of  the  societies  in  the  United 
States.  There  are  enemies  of  the  Co-operative  Movement  among 
syndicalists  or  communists  who  insist  that  the  co-operatives  exploit 
their  employes  after  the  fashion  of  the  capitalists.  But  in  the  face 
of  such  keen  competition  by  the  private  merchants,  the  co-operatives 
cannot  always  aflFord  to  improve  upon  prevailing  wage  rates,  hours 
of  labour,  and  all  other  conditions  of  employment  at  one  and  the  same 
time. 


EMPLOYES  AND  WORKMEN  249 

societies  will  not  be  willing  to  give  their  employes  higher 
salaries  than  they  earn  themselves. 

They  consider  it,  then,  very  unjust  that  their  workers  should 
go  on  strike,  particularly  on  sympathetic  strikes,  that  is  to 
say  strikes  declared  without  grievances  against  the  co-opera- 
tive societies,  but  merely  to  support  a  strike  against  traders 
or  manufacturers.  This  is  what  happened  in  Paris  a  few 
years  ago  during  a  strike  of  bakers'  operatives.  The  work- 
ing bakers  of  co-operative  societies  were  forced  to  abandon 
their  work,  much  to  the  indignation  of  co-operators.  The 
latter  said,  quite  rationally,  that  it  was  not  only  a  blow 
against  the  interests  of  the  working-class  (as  co-operative 
societies  are  formed,  in  fact,  by  workers  for  workers),  but 
also  an  error  in  tactics,  as  it  would  have  been  of  great  serv- 
ice to  the  strike  itself  for  the  co-operative  bakeries  to  have 
remained  open,  if  only  to  provide  bread  for  the  strikers. 

The  third  demand  of  the  trade  unions  has  been  admitted 
by  some  socialist  co-operative  societies,  but  has  been  dis- 
regarded as  a  rule.  Would  it  suffice,  then,  to  reply  to  the 
trade  unions  thus :  Make  it  obligatory  on  every  trade  union- 
ist to  join  a  co-operative  society  if  there  is  one  in  his  vicin- 
ity.'' Certainly  not!  Then  why  ask  co-operative  societies 
to  do  for  the  trade  unionist  what  the  trade  unions  will  not 
do   for   them  ? 

The  two  organizations  must  recruit  by  their  own  methods, 
but  they  need  not  play  the  part  of  reciprocal  recruiting 
agents. 

It  goes  without  saying  that  if  co-operative  societies  must 
not  compel  their  employes  to  join  a  trade  union  they  must 
not  prevent  them  from  doing  so,  as  many  employers  still 
do.     Employes  must  have  full  liberty  in  this  respect. 

But  co-operative  societies  must  somewhat  regretfully  ad- 
mit that  their  employes  sometimes  form  a  trade  union  com- 
posed solely  of  co-operative  employes.  Such  an  organiza- 
tion is  obviously  abnormal,  because  a  trade  union  is  by  its 


250     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

very  definition  a  "professional"  association,  but  a  distribu- 
tive society  is  not  a  professional  one.  It  is  quite  pennissi- 
ble  for  employes  of  a  co-operative  grocery  to  join  a  trade 
union  of  grocers'  assistants,  or  a  baker  from  a  co-operative 
bakery  to  belong  to  a  trade  union  of  working  bakers ;  but 
if  they  band  together  among  themselves  and  not  with  com- 
rades of  the  same  trade,  it  is  obvious  that  they  are  associat- 
ing against  the  co-operative  societies.  Such  associations  are 
being  formed  in  various  countries,  and  their  very  existence 
reveals  the  antagonism  to  which  we  have  already  drawn  at- 
tention. In  England,  the  A.  U.  C.  E.  (Amalgamated  Union 
of  Co-operative  Employees),  created  in  1891,  comprises  more 
than  50,000  employes,*  and  makes  terms  with  the  societies 
with  ever-increasing  success.  Things  have  come  to  such  a 
pass  that  co-operative  societies  have  had  to  organize  and 
constitute  a  defence  fund,  to  resist  the  pressure  of  the  em- 
ployes union. 

Meanwhile,  there  is  a  permanent  Conciliation  Board,  com- 
posed of  representatives  of  co-operative  societies  and  the 
trade  unions,  whose  office  it  is  to  smooth  over  the  disputes 
between  the  societies  and  the  employes ;  but  it  is  not  ob- 
ligatory for  either  side  to  have  recourse  to  this  Board  in  case 
of  trouble. 

(2)   Means  of  Reconciliation 
Three  methods  have  been  tried — 

(a)  The  Memher-Employe 
Would  not  the  simplest  method  of  reconciliation  be  to 

*  Author's  Note.  Exactly  51,399  at  the  end  of  1915;  there  were 
only  2,179  in  1896.  This  is  a  very  formidable  growth  in  twenty  years. 
They  have  an  income  of  more  than  £40,000,  used  for  the  service  of  their 
members,  which  proves  that  these  employes  are  not  too  badly  paid. 
Nearly  one-fifth  of  the  employes  are  women. 

In  France,  or  at  least  in  Paris,  there  is  also  a  trade  union  of  co- 
operative employes,  but  on  a  smaller  scale. 


EMPLOYES  AND  WORKMEN  251 

make  it  obligatory  on  every  co-operative  employe  or  work- 
man to  join  the  society?  Then,  having  become  his  own  em- 
ployer, there  would  be  no  further  opposition  of  interests; 
he  cannot  fight  against  himself.  Or,  rather,  there  would  no 
longer  be  employer  and  employed,  but  only  workers,  each 
haWng  his  own  task,  and  all  being  equal. 

Unfortunately,  the  solution  is  not  so  simple  as  it  appears. 
Co-operative  societies  have  taken  two  or  three  opposing 
views  of  this  question;  obligation,  refusal,  liberty. 

One  section,  that  of  the  socialist  type,  has  adopted  the 
first  solution.  Their  employes  are  recruited  from  their 
members,  or  the  condition  of  membership  is  imposed. 

But  a  large  number  of  other  societies,  and  among  them 
a  few  English  societies,  demand,  on  the  contrary,  that  their 
employes  and  workmen  shall  not  be  members  (admitting,  of 
course,  their  right  to  join  any  other  society  existing  in  the 
neighbourhood).  They  consider  it  incompatible  for  one  to 
be  a  member  and  an  employe  at  the  same  time.  And  it 
must  be  admitted  that,  if  this  exclusion  appears  irrational 
and  surprising  from  the  point  of  view  of  co-operative  doc- 
trine, from  the  practical  point  of  view  it  has  many  solid  ar- 
guments to  uphold  it.  In  the  first  place,  if  an  emploj'e  is  a 
member  of  the  society,  there  is  a  danger  that  discipline  and 
authority  (both  indispensable  to  efficient  business  working) 
may  be  seriously  compromised,  as  all  members  are  equal  in 
fact  and  in  law.  If  the  manager  has  any  remarks  to  make 
or  objections  to  offer  to  the  employe  the  latter  may  answer 
that  he  has  equal  rights  and  authority  with  the  former;  and 
even  if  he  is  dismissed  as  an  employ^,  he  cannot  be  dismissed 
as  a  member. 

Further,  if  the  employe-salesman  is  also  a  purchasing 
member,  if,  consequently,  he  sells  to  himself,  there  is  always 

The  same  exists  in  Germany;  and  there  is  also  a  Board  of  Concilia- 
tion, which  collects  information  relating  to  the  rate  of  pay,  and  strives 
to  get  the  highest  wage  put  into  force. 


252     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

a  certain  temptation  here  to  illegal  transactions.  If,  also, 
in  addition  to  this,  the  employe  becomes  administrator,  and 
as  such  is  called  upon  to  control  his  own  actions,  it  is  clear 
that  such  a  confusion  of  roles  is  dangerous  to  the  working  of 
the  business.  Apart  from  all  suspicion  of  dishonesty,  the 
presence  of  employes  at  general  meetings,  with  the  right 
to  vote  and  the  right  of  election  to  office,  is  calculated  to 
complicate  the  task  of  administration  to  a  considerable  ex- 
tent. It  may  be  said  that  the  number  of  employes  is  very 
small  in  proportion  to  that  of  the  members,  and  that  con- 
sequently their  presence  at  general  meetings  would  not  cause 
any  serious  inconvenience.  Tliis  may  be  true,  but  very  prob- 
ably these  emplo^'es  will  be  the  most  assiduous  in  their  at- 
tendance, because  they  will  always  have  some  grievances  to 
bring  forward.  And  if  it  happens  that  the  ordinary  mem- 
bers are,  on  the  contrary,  unenthusiastic,  as  is  frequently  the 
case,  it  may  be  that  the  measures  which  are  passed  at  the 
general  meetings  will  be  much  more  favourable  to  the  inter- 
ests of  the  employes  than  to  those  of  the  society. 

These  arguments,  however,  do  not  appear  to  us  sufficient 
reasons  for  refusing  to  the  employe  the  common  right  to 
join  the  society  or  not,  as  he  may  wish.  To  refuse  it  might 
make  him  suspicious,  and  prejudice  him  beforehand  against 
the  society.  And  if  wc  object  to  the  employe  selling  to 
himself  then  we  should  have  to  refuse  him  the  right  of  buy- 
ing in  the  shop,  even  though  the  shop  be  open  to  the  public, 
which  would  be  somewhat  drastic ! 

And  as  for  the  presence  of  employes  at  meetings,  apart 
from  a  few  drawbacks,  this  might  have  a  good  effect.  It  is 
unquestionable  that  any  business  in  which  those  who  must  be 
subordinate  are  themselves  in  control  requires  a  high  stan- 
dard of  education  and  morale  among  those  controlled ;  but  it 
is  just  such  a  spirit  that  co-operative  societies  should  strive 
to  create  and  to  foster.     Instead  of  believing  that  the  dual 


EMPLOYES  AND  WORKMEN  253 

role  of  member  and  employ^  might  lead  to  fraud,  we  sliould 
regard  it  with  optimism  as  a  safeguard,  because  any  trick- 
ery will  rebound  on  the  employe-member  in  the  form  of 
a  diminished  dividend. 

Between  these  two  directly  opposing  views  with  regard  to 
their  employes — obligatory  membership  or  prohibition — the 
majority  of  societies  have  simply  adopted  the  policy  of  leav- 
ing them  free  to  act  in  the  matter  as  they  choose,  and  this 
is,  in  our  opinion,  the  wisest  course.  It  is  the  same  as  we 
adopted  in  the  analogous  questions  as  to  employes  joining  a 
trade  union  or  not. 

The  question  becomes  more  delicate  when  it  is  a  matter  of 
the  employes  becoming  members,  not  only  of  the  society, 
but  of  its  management  committee.  We  are  of  the  opinion 
that  if  the  right  of  an  employe  to  be  a  member  be  admitted 
it  would  then  be  impossible  to  refuse  him  the  right  of  election 
as  administrator,  on  condition,  however,  that  a  limit  should 
be  put  to  the  number  of  places  reserved  on  the  committee  for 
emplojes;  because  while  it  is  fair,  and  even  advantageous 
to  the  Avorking  of  the  society,  that  employes  should  take 
part  in  its  administration,  it  would  be  inadmissible  for  the 
society  to  be  run  and  governed  by  its  own  employes — the 
society  does  not  belong  to  them. 

There  are  some  socialist  co-operative  societies  which  allow 
their  employes  to  serve  on  their  committee  even  though  they 
may  not  belong  to  the  society.  The  right  thus  recognized  is 
founded  solely  on  their  quality  as  workers,  and  not  as  mem- 
bers. The  Socialist  Co-operative  Congress  at  Amiens  in 
1912  declared  "that  the  most  extensive  collaboration  should 
exist  between  the  management  committee  and  the  employes 
of  a  co-operative  society,  that  these  latter  should  always 
be  able  to  take  effective  part  in  the  committee  of  manage- 
ment and  control,  and  to  have  representatives  on  the  same, 
with  right  to  vote."     The  consumers'  society  of  Geneva  has 


254.     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

lately  (July,  1919)  rejected  by  an  enormous  majority  the 
claim  of  its  employes  to  be  admitted  to  its  management 
committee.  It  is  true  that  the  societies  which  confer  tliis 
right  on  their  employes,  generally  make  them  pay  rather 
dearly  for  it,  by  imposing  some  hard  obligation  on  them, 
such  as  making  a  minimum  of  purchases  at  the  store,  higher 
than  that  of  the  members'  average,  generally  also  the  obliga- 
tion of  joining  some  trade  union  or  other,  of  becoming  a 
member  of  the  socialist  party,  or  even  (we  have  ascertained 
this  fact)  of  refraining  from  attending  church!  It  is  the 
same  principle  as  that  by  which  the  officials  and  employes  of 
the  State  claim  the  right  of  being  represented  on  public 
and  governmental  committees.  And  we  believe  that  for  these 
latter  this  innovation  would  be  favourably  received  and  that 
public  administration  generally  would  gain  thereby.  But 
with  regard  to  the  administration  of  co-operative  societies 
it  would  be  otherwise.  It  seems  unreasonable  that  an  em- 
ploye who  shows  so  little  interest  in  the  society  that  he 
refuses  to  join  it,  should  be  granted  the  right  to  govern  it. 
Besides,  such  a  proceeding  is  absolutely  illegal,  and  a  society 
acting  in  such  a  manner  ceases  to  have  any  status  as  such. 
As  a  matter  of  fact,  in  a  society  with  share  capital  the 
meeting  has  no  right  to  elect  non-members  as  administrators. 
And,  moreover,  if  non-member  employes  take  part  in  a 
general  meeting  and  vote,  the  meeting  and  its  decisions  are 
rendered  null  and  void. 

(b)  The  Profit-Sharing  Employe 

Another  means  proposed  for  establishing  a  lasting  settle- 
ment between  the  co-operative  societies  and  their  employes 
is  participation  in  the  profits,  as  in  other  businesses,  be- 
tween employers  and  employes.  We  know  the  history  of 
that  institution,  which  during  a  whole  generation  had  ap- 
peared as  the  solution  of  the  social  question,  but  which  is 
rather  discredited  today.     It  has,  however,  retained  very 


EMPLOYES  AND  WORKMEN  265 

warm  defenders,  particularly  in  the  co-operative  world.  It 
is  the  essential  principle  in  the  school,  called  in  England  Co- 
partnership* However,  we  should  say  that  of  all  forms  of 
business,  consumers'  co-operation  is  that  in  which  profit- 
sharing  is  the  most  out  of  place.  We  might  say  even  that  it 
is  absurd  to  speak  of  "participation  in  profits"  in  businesses 
Mhich  by  their  very  name  prohibit  profit-making.  That  in 
a  private  business,  a  joint-stock  company,  or  even  in  a  co- 
operative productive  society,  the  workman  should  receive  a 
share  in  the  business  profits,  as  does  the  capitalist,  is  well 
and  good.  But  we  know  that  the  aim  of  the  consumers' 
society  is  precisely  the  elimination  of  profits.  It  gives  none 
to  its  share-holders ;  what  it  distributes  among  its  members 
is  simply  the  savings  effected  on  their  purchases.  What 
claim  could  the  workmen  have  on  these  sums  thus  returned 
to  purchasers?  They  have  not  come  from  the  hands  of 
workmen,  but  from  the  buyers'  pockets.  And  further,  if 
the  society  is  one  whose  rules  prohibit  the  individual  dis- 
tribution of  dividends  even  to  its  members,  why  then  should 
it  do  so  to  its  workmen? 

From   the  practical  point   of  view,  the  introduction   of 

*  Author's  Note.  Even  the  International  Co-operative  Alliance, 
when  it  was  first  formed,  had  as  its  principal  object  the  propagation 
of  profit-sharing  in  the  co-operative  world.  It  was  the  ideal  of  Van- 
sittart  Xeale  and  Greening,  which  they  had  imbibed  from  the  Chris- 
tian Socialists  (page  37),  and  it  was  that  of  Charles  Robert  and  de 
Boyve  in   France. 

As  for  the  English  Wholesale,  it  refused  point  blank  to  apply  profit- 
sharing  to  its  21,000  workmen  or  employes,  either  under  the  form  of 
co-partnership  or  that  of  profit-sharing.  The  majority  of  English 
co-operative  .societies  also  refused;  only  Itl  (that  is  about  one-tenth) 
put  it  into  practice.  They  say  that  their  members  are  also  workmen, 
and  that  it  would  not  be  fair  to  take  away  part  of  their  dividends,  to 
give  it   to  the  employes. 

A  man  who  managed  the  co-operative  society  at  Geneva  for  a  long 
time,  and  whose  name  is  well-known  in  Swiss  co-operation,  Edouard 
Pictet,  wrote  to  us  several  times  that  he  had  instituted  profit-sharing 
amongst  the  employes  of  his  society,  but  that  if  he  had  to  begin  again 
he  would  not  do  .so,  as  the  results  obtained  were  nil,  from  the  point  of 
view  of  work  produced. 


256     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

profit-sharing  in  consumers'  co-operative  societies  is  still 
less  to  be  recommended,  because  this  participation,  which 
could  only  be  worked  by  a  deduction  from  the  dividends, 
will  inevitably  effect  a  reduction  in  these,  and  thereby  hinder 
the  development  of  co-operation  itself. 

The  supporters  of  profit-sharing  say  that,  by  stimulating 
the  interest  and  zeal  of  employes  and  workers,  it  will  finally 
result  in  the  lowering  of  the  cost  of  production  and  an 
increase  of  dividends  for  all.  But  this  theory  seems 
optimistic  if  we  remember,  on  the  one  hand,  how  little 
profit-sharing  finds  favour  with  the  workers  in  general, 
and,  on  the  other,  how  small  is  the  increase  in  salary  result- 
ing therefrom.  In  English  societies  where  they  practice 
profit-sharing  it  only  means  an  average  of  5  per  cent,  on 
the  wages,  that  is  to  say,  not  quite  half  the  average  dividend 
on  purchases,  which  is  13  per  cent.  But  these  objections 
are  aimed  principally  at  the  ancient  system  of  division  of 
profits,  that  is  simply  a  "spice  to  wages,"  as  M.  Leroy- 
Beaulieu  has  it. 

Now,  what  the  English  school  of  co-partnership  recom- 
mend— ^what  they  understand  by  the  word — is  not  simply 
profit-sharing,  but  what  we  call  shareholding  by  employes 
(we  say  in  France,  actionariat  ouvfier))  that  is,  the  par- 
ticipation of  the  workmen  or  the  employe,  not  as  a  wage 
earner,  but  in  the  capacity  of  co-partner.  This  was  in 
practice  lately  is  the  Co-operative  Wholesale  Soqiety  in 
Glasgow,  but  has  recently  been  abandoned. 

Co-partnership  takes  for  granted  that  the  workman  or 
employe  not  only  mat/  but  should  become  shareholder — but 
it  is  not  a  question  of  shares  which  he  may  acquire  like  any 
outsider  as  a  consuming  member  (if  the  society  is  not  one 
which  prohibits  its  employes  from  being  members ) ;  it  is 
a  question  of  a  new  kind  of  shares,  working  shares,  which 
give  him  the  right  to  part  profit  not  as  consumer,  but  as  a 
producer;  the  two  capacities,  of  course,  may  be  combined. 


E.AIPLOYES  AND  WORKMEN  267 

And  as  for  the  objection  that  there  can  be  no  question  of 
profit-sharing  where  there  are  no  profits,  this  does  not  apply 
here.  In  the  case  of  profits  or  savings,  of  "divi,'*  as  the 
English  say,  or  ^'ristournes"  as  the  French  say,  it 
always  means  that  an  advantage  has  been  gained,  a  produc- 
tion in  the  economists'  sense  of  the  word,  that  is,  a  creation 
of  service  or  utility,  which  is  due  to  the  combination  of 
three  factors,  labour,  capital,  and  custom.  It  is  then  only 
just  that  each  of  these  should  have  its  share.  Co-operative 
enterprise  should  set  the  example  of  such  equitable  distribu- 
tion.* 

(c)   The  Responsible  Manager 

Finally,  there  remains  a  third  method  of  settling  the  dis- 
putes between  co-operative  societies  and  their  employes, 
namely,  that  of  making  the  employe-manager  semi-inde- 
pendent, but  responsible.  We  must  admit  the  somewhat 
humiliating  fact,  that  co-operative  societies  have  only 
borrowed  this  mode  of  procedure  from  those  whom  they  are 
out  to  eliminate,  that  is,  the  traders. 

We  know  the  three  stages  of  the  evolution  of  trade  in 
recent  times :  The  small  shop,  concentration  by  the  large 
establishment,  and  decentralization  by  means  of  branch 
houses.  The  large  shop,  strange  to  say,  seems  unable  to  get 
beyond  a  certain  limit,  owing  to  a  curious  economic  law. 
We  are  taught  that  the  general  expenses  decrease  in  propor- 
tion to  the  increase  of  business,  and  that  therein  lies  the 
superiority  of  production  on  a  large  scale.  But  experience 
shows  that  on  reaching  a  certain  point,  the  reverse  is  the 
case,  that  the  cost  of  general  expenses,  instead  of  diminish- 
ing, goes  on  increasing  so  much,  that  it  is  not  always  an 

3  There  arc,  at  the  present  time  few  societies  In  the  U.  S.  which 
share  the  surplus-savinj^s  with  employes,  although  provision  is  made 
for  such  action  by  the  law  in  some  states.  We  do  know  of  one  society, 
however,  which  divides  its  surplus  (when  it  has  any)  between  its 
consumer  members,  its  employes,  and  the  producer  members  from 
which  It  buys  goods. 


258     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

advantage,  and  may  sometimes  even  be  a  disadvantage, 
to  enlarge  the  shop.^ 

Therefore,  to  surmount  this  difficulty  the  branch  establish- 
ment has  been  instituted;  this  means  that  the  large  shop 
spreads  itself  out  in  branches,  and  that  instead  of  trying 
to  attract  the  customer  to  itself,  it  goes  out  to  meet  him. 
The  practical  difficulty  was  to  control  the  branches.  With 
this  object  in  view,  each  branch  manager  is  held  responsible 
for  the  goods  he  has  in  stock;  if  there  is  any  shortage,  he 
must  make  good  the  value  of  the  same  and  has  to  deposit 
security  for  such  an  event.  He  is  paid  according  to  his 
sales.  This  system  of  control  has  been  so  efficacious  in 
practice  that  it  sometimes  occurs  that  a  branch  manager  is 
ruined,  the  head  establishment  gaining  thereby,  and  thus 
the  latter  has  in  the  system  a  source  of  supplementary 
profits. 

Co-operative  societies  have  been  able  to  learn  wisdom  by 
these  lessons.  They  have  endeavoured  to  keep  up  with 
general  trade  in  the  co-operative  movement,  by  passing 
through  the  two  successive  phases  of  concentration  and 
expansion,  both  centripetal   and  centrifugal: 

First,  by  uniting  in  one  single  society  all  the  societies 
scattered  over  any  one  locality.  Thus,  in  England  and  in 
Germany,  they  have  been  able  to  form  colossal  societies  {see 
page  186,  The  Conflict  Between  Co-operative  Societies  and 
Traders). 

Secondly,  by  creating  round  these  gigantic  societies  a 
large  number  of  branches.     To  do  this,  it  only  means  that 

4  Recent  studies  made  by  O.  T.  Hopkins  for  the  Co-operative  Union 
show  such  a  tendency.  A  surrey  of  many  societies  having  an  average 
membership  of  501  members  shows  that  the  sales  per  member  and 
the  wage  rate  per  pound  of  sales  are  very  favourable;  for  other  socie- 
ties with  an  average  membership  of  4975  the  figures  are  not  so  good; 
and  for  a  third  survey  of  societies  with  an  average  membership  of 
14,993  the  figures  are  poorest.  The  large  societies  have  an  advantage 
over  the  small  ones  only  in  proportion  of  total  overhead  to  gross  sales. 


EMPLOYES  AND  WORKMEN  259 

the  pre-existing  societies  should  be  kept  up — in  order  not  to 
disturb  the  habits  of  their  members  and  perhaps  risk  losing 
them — and  open  new  shops  in  any  district  where  they  can 
count  on  a  sufficient  number  of  members.  In  this  way  some 
large  co-operative  societies  have  as  many  as  three  or  four 
hundred  branches. 

But  the  dispersion  of  employes  in  these  small  branches 
— where  sometimes  there  is  only  one  person  to  look  after  the 
shop — ^has  the  inevitable  result  of  making  surveillance 
difficult  and  even  illusory.  The  methods  we  have  just 
detailed — of  making  the  employe  who  sells  a  member  or  a 
profit-sharer — would  not  be  a  sufficient  guarantee  for  the 
society  against  the  misdemeanours  or  the  carelessness  of  the 
employe.  But,  by  the  institution  of  the  responsible  man- 
ager, the  interest  of  the  society  is  bound  up  with  that  of  the 
agent.  It  is  to  his  interest  to  sell  as  much  as  possible — as 
his  salary  depends  thereon — and  to  reduce  to  the  minimum 
the  leakage  for  which  he  is  held  responsible.  Thus,  the 
employe  ceases  to  be  merely  a  paid  official,  and  becomes  an 
independent  contractor,  with  this  difference  only  that  he 
may  not  fix  the  prices  of  the  goods  himself. 

This  system  gives  security  to  the  society  and  at  the  same 
time  freedom  to  the  employe  in  his  work. 

When  the  branch  is  important  enough  to  require  several 
employes,  then  the  individual  agency  is  replaced  by  the 
collective  agency.  This  means  that  all  the  branch 
employes  form  a  sub-co-operative  society  responsible  to  the 
parent  society.  It  is  somewhat  the  same  system  which  in 
industry  is  called  ^^ commandite  d'atelier'^  (collective  piece- 
work)— a  number  of  workmen  contract  with  a  firm  for  the 
execution  of  a  certain  job  inside  the  factory. 

We  must  confess  that  in  thus  seeking  its  guarantee  and  its 
motive  in  personal  interest  co-operation  is  relying  on  the 
very  principle  which  its  mission  is  to  abolish.     Doubtless, 


260     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

this  is  an  inconsistency;  but  no  institution,  however  revolu- 
tionary, can  change  surrounding  conditions  without  taking 
these  conditions  as  its  starting  point. 

For  the  rest,  while  borrowing  this  system  from,  the 
traders'  standard  co-operative  societies  have  ^striven  to 
deprive  it  of  everything  which  made  it  a  means  of  exploita- 
tion for  the  profit  of  the  parent  society.  A  sufficiently  gen- 
erous margin  of  waste  has  been  fixed  so  as  not  to  strangle 
the  manager,  and  in  any  case  a  minimum  salary  is  ensured 
for  him.^ 

5  Co-operatives  in  the  United  States  have  not  yet  reached  this  stage 
of  development.  There  are  many  societies  which  operate  branch  stores, 
but  these  branches  are  still  directly  under  the  control  of  the  Board 
of  Directors  for  the  most  part,  or  of  the  Manager.  We  do  not  know 
of  any  stores  operated  under  such  a  contract  system.  Usually  the 
man  in  charge  of  the  branch  is  one  who  has  been  trained  in  the  parent 
store,  is  a  co-operator  with  a  sense  of  loyalty  to  the  society  as  a  whole, 
and  he  is  given  much  greater  freedom  than  the  manager  of  a  private 
chain  store  enjoys. 


CHAFTXR     XVII 
CO-OPERATION     AND     SOCIALISM 

The  term  co-operation,  when  it  was  first  employed  by 
Owen  and  his  followers  to  describe  a  new  social  order,  was 
synonymous  with  the  term  socialism,  or  rather  (for  in  those 
days  even  socialism  was  very  little  known)  with  communism. 
It  was  the  opposite  of  competition  for  the  followers  of  Owen 
in  England  just  as  it  was  for  the  followers  of  Fourier  in 
France.  Until  the  seventies  of  the  last  century  the  his- 
tories of  the  co-operative  movement  and  of  the  socialist 
movement  were  indistinguishable  from  one  another. 

But  at  this  period  a  cleavage  took  place.  We  may  say 
that  the  Marxian  socialism  which  then  appeared  on  the  scene 
was  a  new  type  of  socialism  altogether.  The  characteristic 
mark  of  this  form  of  socialism  was  that  it  was  essentially 
a  conscious  class  movement  of  the  workers  based  upon  the 
theory  of  a  surplus  value  created  by  labour  and  absorbed  by 
capital.  Its  program  was  class  warfare,  and  its  ultimate 
aim  revolution.  This  socialism  naturally  found  very  little 
of  value  in  co-operation,  since  the  two  movements  were  in 
direct  opposition  to  each  other  on  all  these  points.  The  co- 
operators  were  not  interested  in  the  exploitation  of  the 
workman  in  so  far  as  he  was  a  producer,  but  rather  in  so 
far  as  he  was  a  consumer.  They  never  made,  and  never 
could  make,  any  distinction  between  classes,  since  the  func- 
tion of  consumption  is  just  the  very  function  which  is  com- 
mon to  all  men  without  distinction. 

Finally,  co-operation  aimed,  not  at  confiscating  capital 
which  has  already  been  amassed,  but  at  building  up  a  new 
capital  by  gradual  and  peaceful  methods. 

261 


262     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

Co-operation  was  therefore  considered  as  a  bourgeois 
weapon  and,  while  thej  did  not  deny  the  material  advan- 
tages which  it  could  bring  to  the  working  classes,  the 
sociahsts  set  themselves  to  make  little  of  them  as  being  of  a 
sordid  character.^  Jules  Guesde  said  in  speaking  of  them: 
"Socialists  are  not  prepared  to  sell  themselves  for  a  mess 
of  pottage."  However,  the  example  of  the  Belgian  socialists 
taught  them  to  appreciate  these  advantages  more  highly, 
and  they  went  so  far  as  to  tolerate,  and  even  to  advocate, 
the  formation  of  consumers'  co-operative  societies,  bat  only 
on  condition  that  these  societies  were  simply  subordinate 
cogs  in  the  machinery  of  the  Socialist  party,  whose  chief 
function  was  to  get  new  members  for  that  party,  and  to 
furnish  it  with  funds  in  ordinary  times  and  with  bread  in 
times  of  strikes.  As  a  result  of  this  policy  they  have  been 
accused  of  trying  to  make  co-operative  societies  the  milch 
cows  of  socialism. 

Advocates  of  co-operation  in  every  country  naturally 
protested  against  attempts  to  reduce  their  movement  to  such 
a  position  and  claimed  for  it  the  right  to  maintain  its  inde- 
pendence as  a  separate  movement,  seeking  and  accomplish- 
ing its  own  objects  by  its  own  methods,  and  not  serving 
merely  as  a  weapon  in  the  hands  of  socialists  and  syndi- 
calists. 

This  must  not  be  taken  to  mean  that  true  co-operative 
enthusiasts  do  not  consider  themselves  to  be  socialists  also. 
A  program  such  as  that  which  we  have  described — the 
abolition  of  profits,  control  by  consumers  and  organization 
of  production  with  a  view  to  supplying  the  wants  of  the 
people  rather  than  with  a  view  to  making  of  profits,  the 

1  Industrial  Unionists,  Syndicalists,  Communists,  and  even  Socialists 
in  very  many  cases  have  generally  belittled  the  Co-operative  Move- 
ment in  the  United  States  also,  and  for  much  the  same  reasons.  The 
economic  theory  of  all  such  radical  schools  here  is  rooted  in  the  Marx- 
ian doctrine  that  all  exploitation  is  of  the  wage  earner,  at  the  point 
of  production. 


CO-OPERATION  AND  SOCIALISM  263 

transference  of  the  control  of  industry  from  the  hands  of 
the  capitalists  to  those  of  the  consumer — cannot  be  called 
by  any  other  name  than  that  of  socialism,  and  certainly  its 
opponents  are  not  sparing  in  their  use  of  the  term.  But 
the  socialism  of  the  co-operative  school  is  of  a  brand 
different  from  that  of  the  others,  and  a  brand  which  they 
desire  to  maintain.  In  France,  it  draws  its  inspiration 
from  the  old  school  of  French  socialism  which  existed  in 
1848,  and  it  has  remained  idealistic  and  flexible. 

This  claim  on  the  part  of  the  co-operative  movement  to 
independence  has  given  rise  to  lively  controversies  in  every 
country,  but  in  none  more  than  in  France.  For  17  years, 
from  1895  to  1912,  this  quarrel  filled  the  columns  of  our 
co-operative  papers  and  occupied  the  attention  of  all  our 
congresses.  Working-men's  co-operative  societies  were 
against  middle-class  societies,  socialists  against  neutrals, 
red  against  yellow,  the  school  of  St.  Claude  against  the 
school  of  Nimes,  and  these  impassioned  controversies,  which 
today  are  happily  only  a  historical  memory,  will  always 
remain  an  instructive  chapter  in  the  history  of  co-opera- 
tion.^ 

In  the  long  run  the  school  which  claimed  independence 
for  the  co-operative  movement  proved  victorious.  It  had 
obtained  vigorous  support  in  England,  in  Switzerland,  and 
even  in  Germany,  though  in  the  last-named  country  the 
connection  between  the  Co-operative  Federation  in  Hamburg 
and  the  socialists   (the  Social-Democratic  party  as  it  was 

2  Our  Co-operative  Movement  5n  the  United  States  has  not  seen 
such  heated  controversies  yet.  These  quarrels  have  been  the  cause 
for  repeated  disruption  within  the  ranks  of  organized  labour  and  the 
radical  political  parties;  but  neither  the  consumers'  nor  the  producers' 
co-operatives  have  ever  been  strong  enough  here  to  cause  any  great 
alarm  among  the  other  radical  movements.  We  see  the  first  indica- 
tions of  these  only  within  the  past  two  or  three  years.  The  greatest 
cause  for  controversy  within  the  co-operative  fold  is  the  question  of 
centralization  vs.  local  autonomy  within  the  federation  or  the  conflict 
between  the  producers  and  the  consumers'  schools. 


264     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

called)  was  very  close.  It  was  formally  approved  by  the 
International  Socialist  Congress  at  Copenhagen  in  1910, 
when  a  resolution  was  passed,  which,  after  paying  tribute 
to  the  advantages  "which  are  not  of  a  material  character 
only"  obtained  by  co-operation  for  the  workers,  ended  as 
follows :  "The  working  class  in  its  struggle  against  capital- 
ism has  a  vital  interest  in  seeing  that  workers'  unions, 
co-operative  societies  and  the  socialist  party,  while  pressing 
their  individual  identity,  shall  be  united  by  a  relationship 
which  becomes  increasingly  close  day  by  day."  * 

The  Congress  of  the  International  Co-operative  Alliance, 
which  met  some  days  afterwards  at  Hamburg,  ratified  this 
declaration,  and  it  served  also  as  the  basis  for  the  establish- 
ment of  unity  in  France,  which,  as  we  have  already  said, 
took  place  two  years  afterwards,  in  1912.  The  most 
advanced  spirits  in  what  was  called  the  bourgeois  movement 
and  the  most  moderate  ones  in  the  socialist  movement  found 
no  difficulty  in  coming  to  an  agreement  on  a  common  pro- 
gram, which  was  in  effect  nothing  more  than  the  classical 
program  established  by  the  Rochdale  Pioneers,  described 
in  detail  in  this  book,  with  a  few  modifications  which  the 
development  of  social  methods  naturally  suggested.  The 
following  is  the  text  of  this  historic  document,  or  at  least 
of  the  declaration  of  principles  which  is  the  essential  part 
thereof : — 

*  Author's  Note.  It  should  be  noted,  however,  that  the  declaration 
is  to  some  extent  weakened  by  the  following  reservation,  "Seeing  that 
co-operation  standing  by  itself  would  not  be  capable  of  achieving  the 
end  aimed  at  by  socialism,  that  is  to  say,  the  control  of  government  for 
the  collective  use  of  instruments  of  production,  this  Congress,  while 
warning  the  workers  against  those  who  claim  that  the  co-operative  move- 
ment in  itself  is  all  that  is  required,  declares  that  the  working-class 
has  the  most  vital  interest  in  using  the  co-operative  method  as  a 
weapon   of   class   warfare." 

This  qualification  seems  to  have  particular  reference  to  our  pro- 
gram. Indeed,  we  have  frequently  claimed  that  co-operation  is 
sufficient  in  itself,  not  that  it  sees  in  the  movement  a  panacea  for  all 
social  problems,  but  in  the  sense  that  its  means  are  sufficient  to  achieve 
its  own  end,  which  is  limited  to  the  "betterment  of  the  people." 


CO-OPERATION  AND  SOCIALISM  265 

"The  Co-operative  Union  and  the  Federation  of  Co-oper- 
ative Societies,  being  desirous  of  putting  an  end  to  a  division 
of  forces  which  affords  a  pretext  for  too  many  societies  not 
joining  either  one  or  the  other  of  the  two  existing  organiza- 
tions and  thus  keeps  back  the  progress  of  the  co-operative 
movement  and  prevents  it  from  producing  in  France  results 
as  good  as  it  produces  in  other  countries; 

"In  accordance  with  the  essential  principles  of  co-opera- 
tion as  they  have  been  formulated  by  the  Rochdale  Pioneers 
and  since  applied  with  growing  success  by  millions  of  workers 
in  all  countries,  that  is  to  say: 

"(fl)  The  substitution  for  the  competitive  and  capitalist 
riegime  which  now  exists  of  a  state  of  society  in  which  pro- 
duction will  be  organized  with  a  view  to  meeting  the  needs 
of  organized  consumers,  and  not  for  the  purpose  of  making 
profit : 

"(6)  The  gradual  and  collective  control  of  the  means  of 
exchange  and  production  by  the  organized  consumers,  who 
will  thereafter  enjoy  the  benefits  of  the  wealth  which  they 
themselves  have  created: 

"Acknowledging  the  harmony  between  these  purely  co- 
operative principles  and  those  which  are  incorporated  in  the 
program  of  international  socialism,  but  claiming,  in  ac- 
cordance with  the  decisions  of  the  Congress  of  Hamburg 
and  Copenhagen,  that  the  co-operative  movement  shall  pre- 
serve its  independence: 

"Leaving,  moreover,  to  each  society  absolute  freedom  to 
dispose  of  its  profits  according  to  its  own  will,  with  the 
sole  exception  of  societies  of  capitalists  or  employers,  that 
is  to  say  those  which  allocate  to  their  shares  a  dividend  in 
excess  of  a  certain  fixed  rate  of  interest,  or  which  limit  the 
number  of  their  shareholders,  or  give  their  members  votes 
in  proportion  to  the  number  of  their  shares,  or  wliich  do  not 
admit  the  absolute  sovereignty  of  the  general  meeting  of  the 
picmbers : 


266     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

"Hereby  decide  to  dissolve  the  existing  central  bodies  and 
to  replace  them  by  a  new  body  which  shall  be  called  the 
National  Federation  of  Consumers'  Co-operative  Societies, 
the  Organ  of  Emancipation  of  the  Workers." 

But  though  the  co-operative  societies  have  given  up  their 
claim  to  swallow  the  neutral  societies,  there  still  remains  in 
the  co-operative  world,  and  particularly  in  France,  in 
spite  of  the  union  which  has  been  achieved,  a  considerable 
divergence  of  policies  which  is  exemplified  by  various  types 
of  societies. 

These  may  be  grouped  in  three  divisions ;  the  individual- 
ist school,  the  socialist  school,  and  the  school  of  co-operation 
pure  and  simple. 

(1)     The  Individiudist  Type 

In  France,  this  type  of  society  is  also  called  by  the  name 
of  bourgeois  societ3^  It  is  necessary  to  define  what  is  meant 
by  this  term.  As  a  rule  the  socialists  apply  this  qualifi- 
cation to  certain  societies,  simply  for  the  reason  that  they 
number  among  their  members,  or  on  their  committee,  people 
of  the  middle  classes,  officials,  small  capitalists,  and  clerks, 
or  because  their  members  belong  to  the  Conservative  party 
in  politics,  or  profess  a  certain  religious  faith,  or  because 
they  do  not  contribute  to  strike  funds,  &c.,  in  fact,  it  is  the 
general  attitude  of  the  members  against  which  the  indict- 
ment is  brought. 

But  if  we  are  to  give  this  qualification  a  really  scientific 
significance  it  must  be  applied  only  to  those  societies  which 
seem  to  be,  more  or  less  closely,  societies  of  a  capitalist  type 
of  organization,  and  which  have  no  other  object  in  view 
than  the  personal  advantage  of  their  individual  members. 
Among  these  are  the  following : — 

(1)  The  societies  in  which  the  profits  are  allocated  to 
capital,  that  is  to  say,  divided  among  the  members  in  proper- 


CO-OPERATION  AND  SOCIALISM  267 

tion  to  the  number  of  their  shares.^  Of  such  a  nature  is  the 
Civil  Service  Stores  in  London.  This  society,  which  inciden- 
tally is  the  largest  of  all  the  English  societies  as  far  as 
number  of  members  and  turnover  is  concerned,  divides  its 
profit  solely  among  those  members  whe  are  shareholders, 
(ordinary  associates  of  the  society  merely  pay  a  small  en- 
trance fee  for  the  right  of  purchasing)  and  since  its  princi- 
ple is  to  sell  very  cheaply,  while  the  number  of  its  mem- 
bers who  hold  shares  is  very  small  and  its  turnover  enor- 
mous, it  can  distribute  large  dividends,  and  its  shares  are 
quoted  at  a  considerable  premium. 

There  are  other  societies  in  London  organized  on  the 
same  basis,  one  for  the  officials  of  the  higher  grades,  one  for 
officers,  &c.,  but  they  are  not  reckoned  among  the  co-opera- 
tive societies  so-called,  and  are  not  members  of  the  Co-oper- 
ative Union.  They  do  not  officially  bear  the  name  of 
co-operative  societies,  but  only  that  of  supply  societies. 
Nevertheless,  they  preform  a  useful  service  in  meeting  the 
needs  of  an  important  class  of  consumers  and  helping  them 
to  live  more  cheaply  than  they  otherwise  could. 

The  same  must  be  said  of  societies  which  disti'ibute  some 
part  of  their  profits  to  their  shareholders,  but  not  the  whole 
of  them.  However  small  this  part  may  be  it  is  sufficient  to 
do  away  both  legally  and  morally  with  the  co-operative 
character  of  the  societies.  The  only  exception  which  can  be 
allowed  to  this  rule  is  that  of  the  payment  of  a  fixed  rate  of 
interest,  which  cannot  be  counted  a  part  of  the  profits  as  it 
is,  on  the  contrary,  an  essential  part  of  the  cost  of  produc- 
tion. 

3  There  are  many  such  associations  in  the  United  States  but  they 
are  not  considered  co-operative  except  by  people  quite  ignorant  of 
co-operative  principles.  They  have  usually  been  short-lived  but  have 
often  succeeded  in  collecting  millions  of  dollars  from  foolish  in- 
vestors before  they  fail.  Some  of  the  most  barefaced  of  these  schemes 
even  masquerade   as    Rochdale   co-operative   societies.     In    addition    to 


268     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

(2)  Those  which,  while  they  divide  profits  in  proportion 
to  purchases,  have  classes  of  members,  i.  e.,  a  limited 
number  of  shareholders,  who  keep  the  complete  control  of 
the  society  in  their  own  hands,  and  associate  members,  who 
take  no  part  in  the  general  meetings  of  the  society.  An 
example  of  this  kind  is  the  Society  of  Civil  Servants  of  the 
State,  the  City  of  Paris,  and  the  Department  of  the  Seine. 
The  society  of  persons  employed  by  the  City  of  Paris  and 
Department  of  the  Seine,  founded  in  1887,  has  22,000 
members,  of  whom  7,000  are  shareholders  and  15,000  merely 
associates,  and  its  total  turnover  is  nearly  £400,000,  in- 
cluding the  business  amounting  to  £80,000  which  it  does 
with  certain  shops  with  which  it  has  an  agreement,  and  which 
undertake  to  give  the  members  a  discount,  but  this  practice 
is  also  a  departure  from  the  principles  of  co-operation 
see  above  page  186).  There  are  societies  of  a  similar  type 
in  Italy. 

The  associates  can  become  shareholders  only  when  a 
shareholder  gives  way  to  them  and  sells  his  share.  The 
shares  are  therefore  much  sought  after  and  may  be  quoted 
above  par  in  exactly  the  same  way  as  the  shares  of  a  joint 
stock  company. 

Certainly  their  value  will  not  rise  as  high  as  that  of  the 
similar  societies  in  England,  because  the  shareholders  are 
on  an  equal  footing  with  the  associates  with  regard  to  divi- 
dends, but  all  the  same  they  have  a  surplus  value,  owing  to 
the  fact  that  the  shareholders  alone  have  a  claim  on  the 
reserve  fund,  which  is  constantly  increasing,  and  also  to  the 
fact  that  the  demand  for  shares  is  greater  than  the  supply. 

This  large  society,  like  those  in  London,  stands  apart 
from  the  Others,  and  has  always  been  considered  even  in 
legal  procedure  as  a  commercial  firm. 

vesting  votes  in  capital  rather  than  in  men,  these  associations  usually 
put  all  the  controlling  power  into  the  hand  of  a  few  selected  directors 
or  trustees. 


CO-OPERATION  AND  SOCIALISM  269 

(3)  Those  which  allocate  part  of  their  profits  to  the  mem- 
bers of  the  executive  committee;  the  Supreme  Court  has 
decided  in  this  sense  on  various  occasions.  Particularly 
in  the  case  of  the  large  society  already  mentioned  which 
allowed  the  Executive  Committee  12  per  cent,  of  the  profits 
and  the  Ad\'isory  Committee  3  per  cent.,  a  share  which 
would  have  been  exhorbitant,  had  it  not  been  that  as  a 
matter  of  fact  the  members  of  committee  wisely  decided 
to  limit  themselves  by  their  own  action  to  a  maximum  of 
£48. 

It  is  not  possible  to  lay  down  a  hard  and  fast  rule  on  the 
matter,  for  payment  of  committeemen  may  reasonably  be 
allowed  in  certain  cases,  and  may  even  have  a  good  effect 
by  weakening  the  temptation  to  receive  secret  commissions  or 
bribes.  The  payment  can  also  be  considered  as  salary  for 
work  actually  done,  and  even  if  we  consider  it  as  a  share  of 
the  profits,  it  does  not  seem  to  be  more  open  to  criticism 
than  the  share  which  is  freely  allowed  to  the  employes,  ex- 
cept in  so  far  as  it  is  liable  to  create  unfortunate  competi- 
tion in  the  elections  to  the  committees. 

(4)  Those  which  are  not  controlled  democratically,  that 
is  to  say  those  in  which  certain  members  have  a  dominating 
voice  in  the  meetings  by  reason  of  the  number  of  their  shares 
or  who  are  ex-officio  members  of  the  executive  without  being 
elected,  as  is  the  case  in  some  consumers'  societies  which  are 
under  the  patronage  of  employers  and  which  are  as  a  rule 
developments  of  benefit  societies. 

The  four  classes  of  society  which  we  have  described  are 
altogether  unconstitutional  and  are  not  true  co-operative 
societies  although  they  bear  the  name,  and  generally  the 
Federation  does  not  accept  them  as  members.  But  they  are 
not  numerous,  while  there  are  others,  of  which  there  are  a 
great  number,  which,  while  constituted  according  to  the 
ortliodox  principles,  nevertheless  have  tendencies  of  an 
individualistic,  bourgeois,  or  commercial  character,  in  the 


270     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

sense  that  they  are  only  concerned  with  obtaining  individual 
advantages  for  their  individual  members. 

The  characteristics  of  these  societies  diiFer  according  to 
the  country.  In  France,  they  can  be  recognized  principally 
by  their  refusal  to  make  any  grants  for  educational  or  prop- 
agandist purposes  or  for  reserve  funds  for  developing  the 
business,  and  by  their  unwillingness  to  join  unions  of  socie- 
ties. They  say  that  they  have  no  need  of  these  things 
for  themselves,  and  if  others  have  such  a  need,  that  is  their 
affair;  and  if  they  do  vote  the  contribution  which  is  neces- 
sary to  maintain  the  union  they  do  it  with  a  very  bad  grace. 

In  England,  on  the  other  hand,  there  are  practically  no 
societies  which  refuse  to  fulfil  their  duties  in  these  regards, 
but  their  individualistic  tendency  shows  itself  in  the  form  of 
what  is  known  as  "divi-hunting."  This  has  risen  to  such 
proportions  that  scarcely  a  number  of  the  Co-operative 
News  is  without  letters  and  reports  of  meetings  devoted  to 
this  matter,  which  some  people  call  a  pest.^  However,  these 
protests  are  not  without  effect,  for  it  is  recorded  that  during 
the  last  15  years  there  has  been  a  slight  decrease  in  the 
average  rate  of  dividend.  Nevertheless,  there  are  still  a 
number  of  societies  which  pay  more  than  20  per  cent.  In 
France,  the  consumers'  societies  of  the  miners  of  Anzin  pay 
a  dividend  of  20  per  cent.,  that  of  Saint-Remy-sur-Avre 
paid  13  to  15  per  cent.,  for  a  long  time,  and  that  of  Geneva 
has  paid  13  per  cent,  for  the  last  20  years. 

*  In  the  United  States  such  societies,  in  addition  to  these  character- 
istics, usually  carry  this  distinction:  they  are  noted  for  their  timidity 
in  times  of  social  crises.  Their  members  are  so  closely  related  to  the 
profiteering  classes  in  society  that  they  refuse  to  espouse  publicly 
the  cause  of  the  wage  earners  during  a  strike  or  lockout,  they  are 
ultra-patriotic  during  national  crises,  they  are  conservative  politically. 
Even  though  they  are  not  economically  tied  up  with  the  exploiting 
classes,  their  cultural  background  is  of  this  type.  Between  the  mem- 
bers of  such  a  society  a  real  co-operative  spirit  often  develops,  but 
this  spirit  is  too  often  so  closely  confined  to  the  particular  group,  that 
the  resulting  clannishness,  exclusiveness  is  far  worse  than  the  most 
highly  developed  class-consciousness   among  radicals. 


CO-OPERATION  AND  SOCIALISM  271 

There  are  also  a  few  socialist  societies  in  Belgium  and 
France,  particularly  in  the  Department  du  Nord,  which 
pay  even  higher  dividends — thus  the  Roubaix  Society  pays 
28  per  cent.,  and  the  Vooruit^  of  Ghent,  paid  38  per  cent., 
before  the  war. 

In  the  same  way  one  can  only  call  those  societies  whose 
sole  object  is  to  give  their  members  a  taste  for  practising 
thrift,  individualistic  societies ;  we  have  already  remarked 
(page  20)  that  that  was  precisely  the  role  which  economists 
of  the  liberal  party  in  politics  assigned  to  co-operative  socie- 
ties in  general.  This  was  the  idea  which  Schultze-Delitzch 
formed  of  credit  co-operation  and  consumers'  co-operation, 
and  to  which  the  Central  Union  which  he  founded  has 
remained  faithful,  thus  causing  the  schism  of  which  we  have 
already  spoken  (page  45).  Such  also  was  the  view  held  by 
the  PYench  statesman,  Leon  Say.  In  a  discussion  on  this 
subject  at  the  Society  for  Political  Economy  in  November, 
1886,  he  defined  co-operation,  whether  for  distribution, 
building,  credit,  or  other  purposes,  as  savings  banks  brought 
to  a  pitch  of  perfection  and  using  their  funds  through  and 
for  the  benefit  of  the  depositor.  This  was  also  the  theory 
of  a  great  economist,  Walras,  who  at  that  period  was  con- 
ducting a  campaign  with  Leon  Say.  Co-operation  was 
for  him  the  amassing  by  the  worker  of  capital  by  means  of 
savings. 

Returning  to  this  definition  in  a  lecture  on  November 
27th,  1886,  he  added:  "If  the  co-operation  movement  has 
an  ethical  effect,  it  is  through  the  ethical  value  of  thrift.  If 
it  makes  for  thrift,  it  does  so  by  the  capacity  of  thrift  to 
create  freedom."  At  the  same  time  he  did  not  seek  to 
conceal  from  himself  that  "a  number  of  people  engaged  in 
the  co-operative  movement  will  consider  that  this  point  of 
view  is  lacking  in  idealism;  for  them  the  object  is  not  the 
creation  of  habits  of  thrift,  it  is  the  liberation  of  the  work- 
ing man.'* 


272     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

However,  the  characteristics  which  we  have  just  enu- 
merated— class  spirit,  thirst  for  dividends  and  absorption 
in  individual  savings — are  not  sufficient  reasons  for  dis- 
qualifying societies  of  this  kind  and  refusing  to  allow  them 
the  name  of  co-operative  societies. 

Such  as  they  are  they  can  do  very  useful  work,  and 
they  may  even  be  considered  as  a  necessary  phase  in  the 
development  of  the  movement;  they  are  the  chrysalids  of 
co-operation. 

(2)   TJie  Socialist  Type 

We  have  already  recognized  that  socialist  co-operative 
societies  generally  get  a  larger  measure  of  discipline  and 
more  sacrifices  from  their  members  than  do  the  bourgeois 
societies.  This  is  quite  natural ;  in  every  department,  and  at 
all  times,  the  fighting  spirit  and  the  spirit  of  solidarit}^  go 
hand  in  hand,  and  those  who  are  engaged  in  any  struggle  are 
more  inclined  to  close  their  ranks  and  agree  to  sacrifices 
than  those  who  merely  pursue  a  more  or  less  distant  ideal; 
we  can  easily  understand  that  those  who  are  fighting  for  the 
red  flag  will  probably  be  more  ardent  than  those  who  follow 
a  star — a  star  which  in  most  cases  is  only  visible  to  the 
few. 

But  as  far  as  concerns  their  constitution  and  their  work- 
ing the  socialist  societies  do  not  differ  essentially  from  the 
bourgeois  ones. 

However,  the  following  are  some  outstanding  differences  :* 

(1)  They  give  no  interest  on  share  capital,  as  a  rule,  but 
are  obliged  to  give  interest  on  borrowed  capital,  when  they 
have  to  borrow. 

(2)  They  are  generally  "class"  associations,  that  is  they 

*  Author's  Note.  As  far  as  managemtnt  is  concerned  they  generally 
do  away  with  the  office  of  president,  being  satisfied  with  a  secretary. 
They  give  (in  theory,  at  least)  more  favourable  treatment  to  their 
employds,  not  only  in  wages,  but  also  in  regard  to  participation  in 
the  administration. 


CO-OPERATION  AND  SOCIALISM  273 

only  admit  workmen,  or,  at  least,  wage  earners;  there  are 
some  which  only  admit  members  of  trade  unions.  And  all 
the  societies  which  belonged  to  the  old  group  called  la 
Bourse  des  Cooperatives  (Co-operative  Exchange)  only 
admit  members  who  are  adherents  to  the  program  of 
the  socialist  party.  This  meant  a  subscription  annually 
per  member  towards  the  party  and  "socialist  propaganda." 
This  attitude  is  intolerant,  but  logical ;  we  can  see  that  so- 
cieties which  place  co-operation  upon  a  footing  of  class 
warfare  cannot  without  inconsistency  open  their  ranks  to 
members  belonging  to  the  very  class  against  which  they  are 
fighting,  and  whose  presence  could  only  have  the  effect  of 
weakening  their  cause.  Even  among  the  socialist  co-opera- 
tors there  are  many  who  condemn  this  view:  "As  for  mak- 
ing it  obligatory  to  belong  to  the  socialist  party,  that  is  a 
different  matter.  We  do  not  pose  as  adversaries  of  the 
party,  but  we  believe  that  to  accept  tlxis  idea  would  be  to 
throw  a  bone  of  contention  among  our  societies,  which  could 
only  result  in  the  formation  of  two  opposing  parties  among 
co-operative  comrades."  Thus  one  of  the  reporters  ex- 
pressed himself  at  the  Socialist  Congress  of  Montherme, 
1909. 

(3)  They  are  much  more  bent  on  the  socialization  of  pro- 
duction, that  is  they  only  admit  productive  enterprises  as 
appendages  of  consumers'  societies,  as  mere  workshops,  and 
not  as  autonomous  associations  (see  page  237).  They  even 
go  so  far  as  to  demand  nationalization  of  the  land.  The 
English  co-operative  societies,  although  not  socialistic, 
passed  a  formal  resolution  to  this  effect  at  the  recent 
Congress  in  Lancaster  (1916),  because  of  the  conditions 
arising  out  of  the  war:  "The  Congress  urges  that  as  the 
Government  has  assumed  control  of  industry  it  will  also 
take  over  the  control  of  land  .  .  .  with  a  view  to  pro- 
moting all  its  resources  in  the  fundamental  interests  of  the 
nation." 


274     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

(4)  And  as  for  the  distribution  of  dividends,  we  must 
distinguish  between  theory  and  practice.  In  principle,  they 
condemn  all  individual  distribution  of  profits  as  tainted  with 
capitalism  and  selfishness,  and  declare  that  these  dividends 
should  be  dedicated  wholly  to  works  of  general  social  utility, 
which  we  shall  mention.^ 

But  as  a  matter  fact  this  ideal  is  realized  only  by  a 
very  small  number  of  societies,  perhaps  only  one,  the 
*'Fraternelle"  of  Saint-Claude,  which  is  considered  a  perfect 
type  of  socialist  co-operative  society.  An  immense  major- 
ity of  these  socialist  societies  distribute  a  large  part  of 
the  surplus  to  the  members,  because  thej'  know  well  that 
if  they  did  not  make  this  concession  to  the  selfishness  of 
human  nature  they  would  lose  a  good  many  of  their  mem- 
bers, or  at  least  they  would  get  no  new  recruits.  The 
typical  co-operative  socialist  society,  the  "Vooruif^  of 
Ghent,  distributes  enormous  dividends,  which  exceed  30 
per  cent.  However,  this  does  not  arouse  the  same  criticism, 
as  it  is  counter-balanced  by  large  contributions  to  works 
of  solidarity,  as  we  shall  indicate  presently ;  and  as  far  as 
the  "Vooruit"  is  concerned  the  dividend  is  not  distributed  in 
money,  but  in  dockets  exchangeable  for  goods  at  the  social 
shop,  which  means  that  it  comes  back  to  the  society,  and 
has  not  to  the  same  degree  an  individualistic  character. 
But  they  do  homage,  nevertheless,  to  the  principle,  by  reduc- 
ing the  individual  distribution  to  the  minimum  necessary 
to  retain  their  members — particularly  to  keep  the  house- 
wives— generally  by  limiting  the  bonus  to  5  per  cent,  on 
purchases,  and  dedicating  the  surplus  to  works  of  collective 
utility. 

The  methods  of  employing  their  money,  which  are  char- 
acteristic of  the  socialist  co-operative  societies,  are  vari- 
ous:— 

s  In  the  United  States  there  are  very,  very  few  societies  which 
follow  all  these  practices.  A  few  of  the  most  radical  Jewish,  Finnish, 
and  Italian  societies  are  of  this  kind. 


CO-OPERATION  AND  SOCIALISM  275 

(a)  For  the  common  profit  of  members,  in  the  form  of 
sick  benefit  fund,  for  unemployment,  for  old  age  pensions, 
loans,  medical  or  legal  advice,  and  any  other  object  desig- 
nated as  works  of  solidarity.  It  was  the  Belgian  societies 
which  first  set  tliis  example.  Thanks  to  the  many  advan- 
tages which  they  offer  to  workmen  they  can  always  attract 
and  retain  a  large  number  of  adherents,  more  effectively  than 
by  the  distribution  of  dividends  in  money  (we  know,  too,  that 
often  part  of  the  dividend  is  distributed  not  in  money,  but 
in  goods).*  The  large  French  co-operative  societies  of  the 
Departement  du  Nord  have  followed  their  examples. 

The  organization  of  a  free  medical  service  is  an  interest- 

•  Author's  Note.  The  Vooruit  of  Ghent,  for  example,  takes  from 
the  surplus  enough  to  supply  the   following  services: — 

(1)  Free  bread  (six  loaves  weekly)  in  case  of  illness,  for  six  weeks, 
always  on  the  condition  that  the  member  has  regularly  bought  an  equal 
quantity  of  bread;  if  not,  he  has  only  the  right  to  an  amount  equal 
to  that  which  he  was  in  the  habit  of  buying.  This  acts  as  a  stimulus 
to  loyalty. 

(2)  Free  medical  advice  and  medicines  in  case  of  illness  during  six 
months,  on  condition  that  the  medicines  are  procured  from  the  Vooruit 
pharmacies. 

(3)  Superannuation  pension,  under  fairly  numerous  conditions:  age, 
60  years,  a  membership  of  at  least  20  years,  the  exclusive  purchase 
of  bread  and  at  least  £120  worth  of  other  goods  at  the  society's  stores 
during  the  course  of  these  20  years; 

(4)  Gift  of  10  loaves,  with  cakes  and  groceries  at  every  birth; 

(5)  An  indemnity  of  7s.  6d.  in  case  of  death,  given  to  the  nearest 
relative; 

(6)  The  savings  bank,  giving  4  per  cent,  on  the  deposits; 

(7)  Technical  instruction,  subsidies  to  musical  societies,  to  theatres, 
to   gymnasiums,  travelling,   &c. 

These  works,  altogether,  represented  before  the  war  from  £1,200  to 
£1,600  per  year,  taken  from  the  actual  profits,  and  are  kept  as  regards 
the  book-keeping  quite  distinct  from  "returns"  made  to  the  members 
which,  in  the  case  of  bread,  are  merely  the  result  of  an  increase  iit 
prices. 

The  UnioTie  of  Lille  has  organized  more  or  less  the  same  services: 

(1)  Free  bread  to  indigent  families; 

(2)  Free  loans; 

(3)  Co-operative  propaganda; 

(4)  Subsidy  to  the  Socialist  Federation. 

Very  frequently,  too,  sums  dedicated  to  these  works  are  deducted 
from  receipts  of  ffites  and  concerts,  fine.s,  &c.,  which  permits  the  reduc- 
tion to  a  minimum  of  the  sum  taken  from  the  dividends. 


276     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

ing  feature  of  socialist  co-operation,  and  one  which  impresses 
English  delegates  when  they  visit  us.  Generally  it  is  only 
those  of  at  least  a  year's  membership,  and  who  have  made 
the  minimum  purchases  at  the  store — £12  to  £16  for  a 
household;  £7  4s.  to  £8  for  a  single  woman — who  have  the 
right  to  this  medical  service. 

From  3s.  4*d.  to  4s.  2d.  per  family  was  estimated  as  the 
cost  of  this  service  from  the  society,  assuming,  of  course, 
the  employment  of  doctors  who  have  accepted  the  tariff  fixed 
by  the  society  and  also  that  the  members  will  have  recourse 
more  often  to  a  consultation  in  the  dispensary  rather  than 
expect  a  visit  from  the  doctor  in  their  homes. 

(h)  For  the  development  of  the  co-operative  movement 
itself,  by  propaganda  and  education:  we  need  add  nothing 
on  this  point,  which  already  constituted,  as  we  know,  an 
essential  article  in  the  Rochdale  program  (see  page  92). 

(c)  For  the  benefit  of  the  working  class  in  general,  for 
helping  it  in  the  class  war,  either  by  monetary  aid  in 
the  case  of  strikes,  or  by  subsidies  in  electioneering  cam- 
paigns. This  is  what  the  Belgian  co-operative  societies  and 
the  French  ones  of  the  DSpartement  du  Nord  put  into 
practice.  But  thereby  these  societies  avowedly  enter  into 
the  realm  of  politics,  and  by  doing  so  they  necessarily 
exclude  from  their  ranks  all  those  who  do  not  share  their 
opinions.  This  method  of  employing  their  funds  has 
aroused  the  most  animated  polemics  between  socialists  and 
neutrals — we  shall  return  to  it. 

(^d)  Lastly,  a  very  interesting  method,  but  which  is  seldom 
adopted,  is  the  constitution  of  a  common  indivisible,  in- 
alienable fund,  one  which,  even  in  case  of  the  dissolution 
of  the  society,  cannot  be  returned  to  the  members,  but  will 
be  given  to  the  parish,  or  to  some  work  of  general  public 
utility.  Here  is  a  resurrection  of  mortmain,  in  a  lay  form. 
This    interesting   form   of   disposing   of   a   reserve   fund   is 


CO-OPERATION  AND  SOCIALISM  277 

practised  in  the  society  La  Fraternelle  of  Saint-Claude,* 
but  it  is  improbable  that  it  will  become  general,  as  it  de- 
mands a  little  too  much  disinterestedness.  And  who  would 
profit? — future  generations,  the  proletarian  of  the  future, 
who  probably  will  be  in  much  better  circumstances  than  the 
workman  of  today,  and  much  better  able  to  help  himself  ! 
We  know  that  Buchez  started  the  first  productive  associa- 
tion (in  1834)  on  this  principle,  and  had  to  abandon  it.* 

(3)  The  True  Co-operative  Type 

Most  of  the  societies  in  every  country  can  be  classified 
under  one  or  the  other  of  the  two  preceding  headings.  But 
neither  one  nor  the  other  answers  to  the  idea  which  we 
have  of  true  co-operation,  such  as  we  have  drawn  in  this 
book.  Indeed,  we  may  say  that  both  the  one  and  the  other 
are  only  deviations  from  the  form  and  type  conceived  by 
the  pioneers  of  Rochdale.  This  is  why  we  should  try  to 
restore  it  with  the  modifications  which  social  evolution  has 
rendered  necessary;  and  such  is  the  task  undertaken  in 
France,  notably  for  the  last  30  years,  by  those  who  have 
often  been  called  neo-co-operators,  but  who  are  content 
with  the  more  modest  name  of  the  School  of  Nimes,  the 

*  Author's  Note.  It  was  in  1896  that  the  society  "La  Fraternelle," 
of  Saint-Claude  passed  (not  without  difficulty)  an  amendment  to  its 
rules,  according  to  which  all  the  profits  should  henceforth  be  put  into 
the  social  fund,  i.  e.,  50  per  cent,  to  an  inalienable  reserve  fund,  destined 
ultimately  to  organize  production;  30  per  cent,  to  a  pension  fund; 
20  per  cent,  to  a  provident  and  mutual  aid  fund.  In  the  event  of  the 
dissolution  of  the  society  the  funds  would  return  to  the  commune  of 
Saint-Claude,  in  spite  of  any  possible  opposition  of  the  majority.  (As 
to  the  legality  of  this  clause,  see  above,  page  210). 

6  The  use  of  surplus-savings  for  some  general  social  purpose  is  not 
common  in  the  United  States  except  among  the  more  radical  societies. 
Educational  work  and  propaganda  are  common  to  the  majority  of 
societies.  Less  common,  but  becoming  more  and  more  frequent,  is  aid 
given  to  striking  workers  or  the  unemployed.  There  are  many  in- 
stances of  help  given  to  the  sick,  of  relief  sent  to  Russian  famine 
sufferers,  of  funds  donated  to  the  amnesty  campaign  in  behalf  of  the 
political  prisoners. 


278     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

origin  of  which  we  have  already  explained  (page  42).  They 
do  not  profess  to  preach  a  new  gospel,  but  seek  to  bring  that 
of  the  Pioneers  up  to  date,  rather  like  the  Reformers  of  the 
16th  Century,  who  called  themselves  the  true  successors  of 
the  apostles.  The  results  obtained  have  not  been  great; 
however,  in  France,  and  even  elsewhere  their  work  in  the 
co-operation  movement  has  been  far  from  insignificant. 

The  program  of  the  neo-co-operators  resembles  that  of 
the  socialist  co-operators  so  much  that  they  are  generally 
included  in  the  same  excommunication  by  the  economic 
liberal  school. 

With  no  less  fervour  than  the  socialist  co-operators  they 
fought  unceasingly  against  the  individualist  and  commercial 
conception  of  co-operation,  and  even  more  than  these,  they 
strove  to  give  it  an  ideal.  Recently,  at  the  Scottish  Summer 
School,  Mr.  James  Deans  said:  "What  is  most  urgently 
needed  at  present  is  to  awaken  in  present-day  co-operators 
the  enthusiasm  and  the  idealism  of  the  period  of  the  Pi- 
oneers." This  is  what  is  being  attempted  at  Nimes.'^  And 
even  the  most  essential  item  in  the  socialist  program, 
namely,  the  socialization  of  the  means  of  production,  may  be 
accepted  by  co-operation;  how  can  it  do  otherwise  when  it 
aims  at  placing  successively  commercial  enterprises,  manu- 
facturing industry,  and  eventually  even  agricultural  pro- 
duction in  the  hands  of  associated  consumers?  True,  co- 
operators  want  to  realize  this  socialization  to  the  profit  of 

7  The  campaign  carried  on  for  several  years  past  by  The  Co-opera- 
tive League  has  been  aimed  not  merely  at  dissemination  of  facts  about 
the  organization  and  administration  of  co-operative  enterprises  and 
the  standardization  of  co-operative  laws  and  customs;  it  has  realized 
that  the  movement  is  certain  to  develop  anyway  and  that  it  will  in  soroe 
measure  create  the  proper  technique  for  its  own  development  as  it 
progresses,  and  therefore  The  League  has  put  its  greatest  emphasis 
upon  the  propagation  of  these  ultimate  ideals  which  express  the  spirit- 
ual purpose  of  the  Consumers'  Co-operative  Movement.  Gradually 
there  is  thus  being  erected  a  tradition  that  demands  educational  activ- 
ity on  the  part  of  all  societies  which  consider  themselves  a  part  of  the 
movement  in  the  U.  S. 


CO-OPERATION  AND  SOCIALISM  279 

all  consumers,  that  is,  of  every  one,  while  the  socialists 
only  desire  to  realize  it  to  the  profit  of  the  working  class, 
because  this  is  the  only  class  they  regard  as  being  ex- 
ploited. 

It  is  also  true  that  co-operators  do  not  aim  at  confiscating 
wealth  already  existing  and  appropriated,  but  at  creating 
new  wealth  which  they  will  keep  for  themselves.  But  what 
does  it  matter?  If  their  scheme  is  realized  the  old  capital 
engaged  in  commerce  or  industry  will  become  useless,  as 
it  will  be  without  value  since  it  cannot  be  utilized.  This 
would  therefore  mean  expropriation  without  indemnity. 
And,  moreover,  it  would  not  be  expropriation  by  force  of  a 
revolution  or  by  legal  coercion,  but  purely  economic  expro- 
priation, similar  to  what  goes  on  every  day  by  the  play  of 
open  competition,  by  new  inventions,  or  by  the  opening  of 
new  markets. 

It  must,  however,  be  admitted  that  tliis  program  is 
lacking  in  one  respect,  which  is  of  no  small  importance — it 
is  with  respect  to  land.  We  say  that  we  need  not  socialize 
capital  already  existing,  because  co-operation  will  create 
new  funds — good:  although  socialists  declare  that  this  is 
an  undertaking  be^'ond  the  power  of  workmen's  savings  {see 
page  27).  But  as  far  as  land  is  concerned  it  is  obvious  that 
we  cannot  say  that  co-operation  need  not  socialize  land 
already  owned  by  others,  because  it  can  create  more  land. 
We  can  create  new  capital  indefinitely,  but  we  cannot  create 
new  land.  If  a  co-operative  society,  therefore,  wishes  to 
gain  possession  of  land  it  must  purchase  it,  and  this  seems 
an  almost  impracticable  undertaking. 

And  that  is  why  agrarian  socialists,  and  even  agricultur- 
ists who  are  not  socialists,  like  Henry  George  and  Walras, 
do  not  hold  co-operation  in  much  esteem.  They  say  that 
co-operation  is  unable  to  solve  the  agrarian  question,  which, 
in  their  opinion,  is  the  chief,  even  the  only  question,  all  the 
others    being    governed    by    it.     Walras    says:     "The    co- 


280     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

operative  solution  is  to  say  to  the  workers,  leave  the  rich 
alone  and  make  your  own  fortunes."  Their  answer  is,  "I 
want  justice,  and  not  riches.  I  claim  the  heritage  of  my 
fathers."  And  Henry  George  says  that  co-operation  is  not 
only  unable  to  abolish  the  great  social  evil,  which  is  ground 
rent,  but  that  in  improving  the  condition  of  the  workers  it 
will  have  the  result,  like  all  material  progress,  of  increas- 
ing rents. 

To  this  objection  the  socialist  co-operators  answer,  as 
we  have  seen,  by  accepting  and  even  claiming  the  nationali- 
zation of  the  land  and  minerals  {see  page  273). 

Co-operators  content  themselves  with  the  hope  of  seeing 
landed  property  transformed  gradually  by  the  development 
of  agricultural  co-operative  societies,  associations  which  are 
destined  more  and  more  to  be  subordinated  to  the  control 
of  consumers'  societies  {see  page  241). 

From  the  practical  and  present  point  of  view  the  follow- 
ing are  the  aims  which  are  the  same  on  both  sides : — 

{a)  Co-operative  education,  according  to  the  Rochdale 
doctrine,  in  order  to  prepare  new  generations  of  co-opera- 
tors, without  which  the  realization  of  the  large  co-operative 
society  will  be  impossible;  this  is  to  be  effected  by  all  the 
means  we  have  already  indicated,  conferences,  classes, 
papers,  publications  &c.  {see  above,  page  94). 

(&)  The  creation  of  Co-operative  Unions,  Purchasing 
Federations,  International  Co-operative  Alliances,  with  the 
object  of  maintaining  solidarity  among  all  the  societies — 
above  all  to  the  advantage  of  the  weaker  ones — and  thereby 
to  give  an  irresistible  strength  to  the  co-operative  movement 
in  every  country  and  in  the  whole  world. 

(c)  Formation  of  a  reserve  and  development  fund,  with 
the  principal  object  of  the  organization  of  production,  Avhich 
is  the  ultimate  aim  of  consumers'  co-operation,  whether  this 
production  is  executed  by  consumers'  societies  directly  by 
their  own  means,  or  whether  it  is  attained  by  self-govern- 


CO-OPERATION  AND  SOCIALISM  281 

ing  associations  for  production,  controlled  by  consumers* 
societies. 

But  their  differences  are : — 

(1)  Co-operators  do  not  at  all  express  the  intention 
of  suppressing  the  individual  distribution  of  dividends, 
recollecting  Pascal's  saying,  "that  he  who  wants  to  make 
an  angel,  makes  a  beast  {qui-vewt  faire  Vange,  fait  la  bete) 
knowing  also  that  it  means  not  only  the  arrest,  but  the 
death  of  the  co-operative  movement  in  every  country.  They 
believe  that  the  fact  of  not  allocating  profits  to  the  capital 
constitutes  a  sufficient  revolution.  They  rely  solely  on  the 
progress  of  co-operative  education  to  induce  the  members 
to  consent  to  an  increasing  reduction  in  their  dividends. 
For  the  rest,  we  have  already  seen  that  the  individual  dis- 
tribution of  dividends  is  just  as  widely  practised  among 
socialist  co-operators,  with  few  exceptions,  as  by  the  indi- 
vidualist or  neutral  co-operative  societies.  Professor  Hall, 
one  of  the  leaders  of  the  English  co-operative  movement, 
said  recently  that  "it  has  been  ascertained  that  the  number 
of  members  increases  most  quickly  in  places  where  the 
dividend  is  lowest."  But  in  spite  of  this  assertion,  perhaps 
somewhat  optimistic,  he  does  not  by  any  means  propose  to 
suppress  the  individual  participation,  but  merely  to  reduce 
it  b}'  one-half. 

Nevertheless,  just  like  the  socialists,  they  reserve  a  por- 
tion, the  largest  portion  possible,  for  common  works  of 
utility.  These  works  are  in  part  the  same  as  those  advo- 
cated by  socialists — education,  contributions  to  national 
federations  and  the  International  Alliance,  and,  above  all,  to 
organizations  for  production — ^but  the  divergence  of  opinion 
arises  over  such  works  of  solidarity  as  sickness,  unemploy- 
ment and  strike  funds,  superannuation,  &c. 

We  should  remark  that  associations  specially  created  for 
this  purpose  already  exist,  and  that  it  is  not  a  good  plan 
to  ask  the  consumers'  society  to  adapt  itself  to  every  object: 


282     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

institutions,  like  all  enterprises,  should  conform  to  the  law 
of  division  of  labour. 

That  members  of  consumers'  societies  should  be  advised 
to  employ  part  of  their  dividends  to  pay  their  contributions 
to  mutual  aid  societies,  to  unemployment  funds,  or  to  trade 
unions,  is  well  and  good.  They  would  thus  learn  by  liberty 
the  practice  of  solidarity ;  but  they  will  never  learn  this  if  it 
is  the  society  which,  without  consulting  them,  pays  their 
contributions  for  them. 

And  even  from  the  trade  union's  point  of  view,  it  is  not 
a  metliod  to  be  encouraged,  because,  in  thus  accustoming 
them  to  live  like  parasites  upon  the  body  of  consumers'  socie- 
ties, they  are  being  prepared  for  the  lot  of  parasites,  they 
are  being  made  degenerate.  It  has  been  remarked  that  the 
workmen's  trade  unions  in  the  North  of  France,  a  large 
industrial  region,  show  little  activity,  and  scarcely  even  any 
vitality;  it  is  because  they  are  kept  by  the  co-operative  so- 
cieties. 

(2)  The  co-operative  societies  are  open  to  all.  They 
exclude  no  one  on  account  of  his  social  position,  his  political 
or  religious  opinions:  they  do  not  impose  any  condition  for 
admission,  such  as  being  a  member  of  a  trade  union,  or  of 
belonging  to  the  socialist  party,  or  the  Catholic  Church, 
&c.  It  is  not  merely  in  a  spirit  of  tolerance  that  they  do 
this,  but  because  the  logic  of  their  program  demands  it: 
because  it  is  in  fact  the  emancipation  of  the  consumer  they 
aim  at,  the  only  condition  they  demand  of  their  members  is 
to  be  a  consumer.  In  this  they  also  show  themselves  faithful 
to  the  Rochdale  program  because  it  declares  that  there 
should  be  no  "enquiry  into  the  political  or  religious  opinions 
of  those  who  apply  for  membership" — ^(Fay,  "Co-operation 
at  Home  and  Abroad,"  page  282). 

It  is  true  that  this  attitude  has  brought  upon  the  societies 
which  adopt  it  the  scornful  epithet  of  "neutralist."  They 
were    themselves    wrong    in    accepting    or    employing    this 


CO-OPERATION  AND  SOCIALISM  283 

qualification  to  distinguish  them  from  otlicrs.  It  is  incor- 
rect and  regrettable.  Even  before  the  late  war,  this  word 
was  disliked  by  all  classes  of  belligerents.  It  seemed  to 
justify  the  sarcasm  of  those  co-operators  who  glory  in  the 
fact  of  not  being  neutral,  and  to  give  these  latter,  by  con- 
trast, an  imaginary  virility.  "Neutral  co-operation  has  no 
ideal,  it  does  not  raise  the  moral  and  intellectual  tone  of  its 
members,  and  consequently  cannot  undertake  any  social 
role."  (L'Humanite  quoted  and  approved  by  the  Catholic 
paper  Sillon  of  December  10th,  1906). 

But  here  we  are  not  concerned  with  neutrality  in  the 
sense  of  powerlcssness  or  of  indifference  in  taking  sides.  It 
is  a  question,  on  the  contrary,  of  a  decision  and  of  an 
energetic  determination  not  to  keep  the  benefits  of  co-opera- 
tion for  any  one  class  or  party,  but  to  make  them  accessible 
to  all,  as  generously  as  is  the  light  of  the  sun  or  water 
from  the  spring.  We  do  not  overlook  the  strength  which 
a  strong  and  simple  idea  gives  to  any  group  of  men,  above 
all  when  it  forms  part  of  their  corporate  or  class  interests. 
But  if  they  must  carry  any  particular  colours  in  their  caps 
co-operators  find  themselves  forced  into  separate  organiza- 
tions, and  this  can  only  increase  the  state  of  disunion  of 
the  French  movement  which  is  already  deplorable. 

Observation  of  the  facts  clearly  shows  that  co-operation 
is  respected  and  attracts  the  citizens  of  the  towns  only  in 
those  countries  where  its  political  neutrality  is  recognized. 
The  only  countries  where  co-operation  has  taken  on.  a  politi- 
cal colour  are  France  and  Belgium ;  *  the  example  of  the 
former,  which  is  almost  at  the  bottom  of  the  co-operative 
class,  is  enough  to  warn  us  of  the  danger  of  this  policy. 
Even  in  Belgium,  the  Vooruit  of  Ghent,  or  the  Maison  dtu 
Peuple,  in  spite  of  their  well-earned  reputation,  are  far  from 
representing  as  large  a  proportion  of  the  population  as  less 

8  The  StaflF  of  the  Co-operative  Reference  Library,  Dublin,  states 
that  Italy  may  now  be  added  to  the  number  of  countries  in  which  co- 
operation is  distinctly  political. 


284     CONSUMERS'  CO-OPERATIVE  SOCIETIES 

markedly  political  or  neutral  societies  such  as  Basle,  Leeds, 
or  Breslau.  M.  Hans  Miiller  remarked  in  his  pamphlet 
"La  Theorie  de  la  Lutte  des  Classes"  (the  Theory  of  Class 
War)  that  the  Bale  Co-operative  Society  had  30,000  mem- 
bers out  of  a  population  of  125,000  inhabitants,  i.  e.,  24  per 
cent.  The  Brussels  society,  called  "Maison  du  Peuple," 
had  20,000  members  out  of  a  population  of  650,000,  i.  e. 
only  3  per  cent.  If  we  multiply  the  number  of  co-operators 
by  four,  to  embrace  families,  these  percentages  would  be 
respectively  96  and  12. 

The  principle  of  neutrality  is  moreover,  adopted  not  in 
England  only,  but  in  almost  every  other  country.  At 
the  Swiss  Co-operative  Congress  at  Bale,  in  1900,  in  re- 
sponse to  a  motion  brought  forward  by  some  socialist-co- 
operators,  it  was  passed  by  a  majority  of  60  to  16,  that 
"co-operative  societies  must  keep  neutral  in  religion  and 
politics."  And  German  co-operative  societies  of  the  Ham- 
burg Federation — a  large  number  of  whose  members  belong 
to  the  social  democratic  party — have  repeatedly  proclaimed 
the  principle  of  neutrality  in  the  co-operative  societies, 
while  upholding  the  class,  war  among  the  trade  unions.  The 
International  Co-operative  Alliance  has  constantly  affirmed 
this  principle  at  its  congresses,  in  spite  of  the  efforts  of  the 
extreme  Left  (particularly  at  the  Cremona  Congress  in 
1907)  to  make  them  retract  this  declaration. 

In  the  opposite  sense,  M.  Vandervelde  in  his  book  "!.<«, 
Cooperation  nutre  et  la  Cooperation  Socialiste"  (1913),  is 
very  strongly  adverse  to  neutrality.  But  his  arguments 
appear  to  be  based  on  conditions  peculiar  to  Belgium. 

It  is  further  to  be  remarked  that  the  very  socialists  who 
are  loudest  in  their  attacks  on  political  and  religious 
neutrality  in  co-operative  societies  are  the  first  to  recognize 
it  in  their  trade  unions ! 

(3)  A  further  difference,  though  it  is  implied  in  the  pre- 
ceding one,  is  that  co-operative  societies  refuse  to  take  any 


CO-OPERATION  AND  SOCIALISM  285 

part  in  political  matters  in  distinction  from  the  socialist 
co-operative  societies  of  Belgium  or  the  North  of  France, 
which  take  an  active  part  in  election  campaigns  and  provide 
money  for  them.  In  point  of  fact,  as  far  as  socialist  co- 
operation is  concerned,  it  is  only  Belgium  co-operative 
societies  and  the  French  ones  of  the  Nord  which  have  taken 
up  politics,  properly  so-called.  And  even  the  latter  do 
not  go  as  far  as  the  Belgian  societies,  which  allocate  moneys 
to  electioneering  funds  in  order  to  get  such  or  such  a  deputy 
elected — they  content  themselves  with  making  contribu- 
tions to  the  funds  of  the  socialist  party,  sometimes  called  the 
Guesdist  party. 

The  question  has  frequently  arisen  in  Britain  and  has 
been  the  cause  of  acute  controversy,  though  there  are  no 
societies  there  which  fly  the  socialist  flag.*  The  question 
arose  at  the  Paisley  Congress  in  1905  in  a  modest  form. 
The  question  was  whether  the  co-operative  movement  should 
take  steps  to  secure  the  election  of  a  representative  in 
Parliament  apart  from  all  connection  with  the  Labour 
Party,  or  any  other  political  body.  The  proposal  was  re- 
jected at  two  successive  congresses  by  overwhelming  major- 
ities, and  out  of  1,400  societies  only  six  were  in  favour  of 
it.  British  co-operators  were  alarmed  at  the  idea  of  politics 
bringing  discord  into  their  societies  and  breaking  up  their 
fine  movement.  But  the  war  has  completely  changed  their 
opinion.  It  has  made  co-operators  feel  that  if  they  had  had 
a  place  in  the  Government  they  would  have  been  able  to 
avoid  the  privations  and  sulTerings  which  the  war  caused. 
The  result  of  this  change  of  opinion  was  that  at  the  Swansea 
Congress  (1917)  parliamentary  representation  of  co-oper- 
ators was  proposed  and  passed  by  a  large  majority,  in  spite 
of   the   opposition   of  some   old   co-operators,   disdainfully 

•  Author's  Note.  See  the  booklet  by  Messrs.  Alfassa  and  Barrault, 
Cooperation  et  Soclalisme,  which  gives  the  opinions  of  the  principal 
English  co-operators  and  trade  unionists  on  this  question. 


286    CONSUMERS'  CO-OPERATIVE  SOCIETIES 

called  "the  Old  Guard."  ^  In  France  we  are  more  sceptical 
as  to  the  importance  of  political  action,  and  we  have  more 
confidence  in  that  which  is  solely  economic. 

An  additional  difficulty  in  the  way  of  co-operative  socie- 
ties going  into  politics  is  that  they  must  conciliate  the 
traders  of  the  district  in  the  interest  of  their  candidate. 
That  is  why  the  big  societies  of  the  province  of  Nord  con- 
fine their  business  to  bread  and  coal.  Finally,  all  the  money 
spent  on  elections  means  so  much  less  for  the  real  work  of 
co-operation,  namely  the  formation  of  capital  for  pro- 
duction. 

It  does  not  follow  that  co-operation  societies  have  not 
the  right  and  even  the  duty  of  agitating  to  obtain  laws 
favourable  to  their  development,  or  of  fighting  laws  which 
are  harmful  to  them.  The  British  societies  have  their  Joint 
Parliamentary  Committee  which,  undertakes  this  work.  The 
work  of  thisi  committee  is  in  no  way  incompatible  with  politi- 
cal neutrality,  and  would  not  become  so  even  if  it  were 
formed  of  Members  of  Parliament  provided  they  were  chosen 
not  for  their  political  views,  but  because  of  their  sympathy 
with  co-operation.  In  the  old  French  Union  Cooperative 
(see  page  155)  it  was  the  rule  not  only  that  the  Union 
took  no  part  in  politics,  but  even  that  the  committee  mem- 

9  Professor  Hall,  of  the  Co-operative  Union,  states  that  at  this  Con- 
gress held  at  Swansea  in  1917  it  was  decided  that  steps  should  be 
taken  "to  secure  direct  representation  in  Parliament  as  the  only  way 
of  effectively  voicing  its  demands  and  safeguarding  its  intersets."  A 
j^ear  later  a  "Co-operative  Parliamentary  Representative  Committee"  of 
the  Co-operative  Union  was  set  up  by  a  resolution  of  the  Liverpool 
Congress.     This    Committee   is   now   called    "the   Co-operative    Party." 

In  1920  the  proposal  was  made  that  a  Labour  and  Co-operative  Politi- 
cal Alliance  be  formed.  When  the  matter  came  to  a  vote  at  the  Co- 
operative Congress  in  1921  the  proposal  was  defeated  by  only  four 
votes. 

In  1921  the  Government  introduced  a  bill  which  would  place  a  taxa- 
tion upon  the  surplus  of  co-operative  societies  just  as  though  that 
surplus  were  profits.  The  co-operators  rallied  their  forces  and  the 
bill  was  defeated  by  two  votes: — the  first  defeat  for  the  Government 
of  Lloyd  George,  but  a  defeat  by  so  narrow  a  margin  that  the  party 
in  power  refused  to  consider  it  a  defeat  and  did  not  resign. 


CO-OPERATION  AND  SOCIALISM  287 

bers  should  abstain  individually  from  politics:  none  of  them 
was  ever  a  candidate,  either  in  parliamentary  or  municipal 
elections.  In  the  new  Co-operative  Federation,  several  com- 
mittee members  take  an  active  part  in  political  life  and  some 
were  candidates  at  the  1919  elections.  But  as  a  whole  the 
Federation  holds  itself  aloof  from  party  politics,  and  even 
from  the  Labour  Party. 

It  does  not  follow  that  we  do  not  recognize  the  impor- 
tance of  political  action  in  social  progress  nor  even  that  the 
coming  of  the  time  which  we  have  long  caJled  the  Co-opera- 
tive Commonwealth  {la  Republique  Cooperative)  does  not 
necessarily  imply  the  realization  of  complete  democratic 
government  in  state  and  city.  But  we  think  that  political 
action  should  be  the  result  of  the  free  initiative  of  individu- 
als  or  bodies  wholly  distinct  from  co-operative  societies.* 

*  Author's  Note.     See  our  article  in  the  "People's  Year  Book"  for 
1921  on  the  relation  between  co-operation  and  politics  in  France. 


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